The Chinese economy continues to recover at a steady pace, despite the new coronavirus pandemic and a marked decline in GDP in other countries.
Beijing managed to achieve positive dynamics scorning the pessimistic forecasts of some economists. How has China been able to overcome its difficulties and demonstrate to the world another "economic miracle" while other countries are stumbling?
Historically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More
Isolation Is The Key To Health
The key to the rapid recovery of the Chinese economy was a successful strategy to fight the coronavirus. The government was pursuing a consistent policy, creating zones of extremely tight control in places where infected with coronavirus are established. If the number of infections in the area, county, city, or province is too high, the central authorities impose a regime of complete isolation of these territorial and administrative units.
China was able to stop the spread of the virus primarily through measures to "target the destruction" of local outbreaks. This means that all organizations, public institutions, most trade, and industrial companies in the territory with an increased risk of epidemiological danger suspend activities, and residents spend most of their time at home. Outside the home, they are under constant control, which the Government is assisted by the police and numerous volunteers.
The strategy of "closed cities" in China has existed since ancient times. When there was a plague somewhere or some other source of infection, the authorities simply blocked all entrances to this settlement, preventing the epidemic from spreading through the surrounding area, explained one of the local experts.
The top leadership of the People's Republic of China, including Chinese President Xi Jinping, has repeatedly stated over the past six months that the nation's health comes first. According to the official position of the Chinese leadership, the country will be able to develop normally only after a convincing victory over the pandemic.
It should also be noted that during the isolation period, people started taking up new hobbies. This trend was visible not only in China but in other countries as well. During 2020 a lot of Chinese citizens began to research Forex trading. According to search engine statistics, how to trade Forex for beginners was one of the most searched guides among “How To” guides on the Internet.
We should also emphasize the benefits that trading brings to people. Many of them managed to gain substantial income. Also, the importance of Forex brokers grew rapidly.
Growth In Defiance Of The Pandemic
According to the leading analyst of the Bank of China, theoretically, the Chinese economy is able to ensure the growth rate of national GDP, despite the deterioration of the situation in international markets.
According to the economist, other countries, like China, will be able to restore economic development to the previous level, but for this, they will first have to truly defeat the pandemic, that is, to minimize the number of local infections, and then to zero.
Local authorities have repeatedly noted that the pandemic has hit Chinese small and medium-sized businesses. Companies and entrepreneurs engaged in hotel and restaurant business, shooting and showing movies, holding mass cultural and entertainment events were affected. During the pandemic, many shops, primarily clothing and footwear, as well as cafes went bankrupt, unable to withstand several months of severe quarantine.
Chinese observers call it forced losses and believe that the state and the market will make up for them.
New Recipes For Economic Development
The Chinese government is actively engaged in post-pandemic economic recovery projects, working out new options and formats for international cooperation "to respond correctly to unprecedented challenges and solve a range of complex global challenges." According to Chinese Foreign Minister Wang Yi, no country, including the United States, will be able to resolve the urgent issues in the current situation alone.
The heads of key departments - the Ministry of Finance, the Ministry of Commerce, the General Customs Administration, as well as the Foreign Ministry - have repeatedly stated that Beijing is confident in its abilities and can cope with difficulties. However, as the situation in the world deteriorated, against the background of a decline in foreign trade, foreign investment, and a sharp deterioration in the main economic indicators, this confidence seems to have weakened somewhat.
Because of the pandemic, there are risks of lower demand for the products of industrial companies in China, the impact of negative factors is quite noticeable. In this situation, there are certain challenges, so in the process of restoring regular activities, overcoming the difficulties caused by the difficult epidemiological situation in the world is essential.
Lending And Foreign Investors
At the opening of the third session of the National People's Congress (NPC, the highest legislative body) of the 13th convocation, a report was published in May, emphasizing that the Chinese authorities would strengthen financial support for national enterprises to enable them to recover from the pandemic. The government pays special attention to the revitalization of small and medium-sized businesses, which extended the maturity of unpaid loans until spring 2021.
At the same time, local experts remind, government support and the growth of affordable bank lending is not the only and not always the most effective way to raise the capital that business needs to scale up production and commercial activities. As an alternative, they propose to actively develop the national stock market, to attract investors, including from abroad. According to some Chinese economists, China is still not actively using such opportunities.
However, The top leadership of China is well aware of the need to attract foreign capital to the country: both Xi Jinping and Premier Li Keqiang have repeatedly made promises to increase the openness of the Chinese market and create new, more favorable conditions for foreign companies. It is no coincidence that key investors, along with diplomats and humanitarian workers, are in the "privileged" category of persons who are able to obtain a visa freely to China even in the face of a pandemic, while for the majority of the world's population, due to the difficult epidemiological situation in the world, this is not yet possible.