{"id":6279,"date":"2023-03-27T14:40:19","date_gmt":"2023-03-27T18:40:19","guid":{"rendered":"https:\/\/www.chinacenter.net\/?p=6279"},"modified":"2023-05-04T10:37:43","modified_gmt":"2023-05-04T14:37:43","slug":"the-covid-19-pandemics-impact-on-the-chinese-economy","status":"publish","type":"post","link":"https:\/\/www.chinacenter.net\/2023\/china-currents\/22-1\/the-covid-19-pandemics-impact-on-the-chinese-economy\/","title":{"rendered":"The COVID-19 Pandemic\u2019s Impact on the Chinese Economy"},"content":{"rendered":"
In recent years, China has faced complex and severe challenges: a trade war in 2018, the start of a pandemic in 2020, the real estate turndown in 2021, and the end of \u201cZero-COVID\u201d in 2022. These challenges, especially the COVID-19 pandemic and its stringent public health measures, have negatively impacted the Chinese economy.<\/p>\n
Slowing economic growth since the outbreak of COVID-19, and the uneven recoveries that followed, reflect long-term problems that policymakers must face. More specifically, this paper will cover four aspects of China\u2019s economy: (i) China\u2019s Covid policies and situation, (ii) an overview of China\u2019s GDP growth and international trade, (iii) employment and wages, and (iv) human capital.<\/p>\n
Based on these data, we argue that the slowing of the economy does not reflect a normal business cycle, nor can an upturn in the business cycle solve China\u2019s current economic challenges. The data suggest that low and falling domestic and external demand is behind China\u2019s slowing growth. In addition, serious setbacks to entrepreneurship and human capital acquisition due to the pandemic have created long-term structural challenges to economic growth.<\/p>\n
In December 2019, the first COVID-19 case was discovered in Wuhan, Hubei province. After hundreds of cases were detected in less than a month, Wuhan was locked down on January 23, 2020. From January 23 to 29, all provinces across the country launched a Level 1 Provincial Response to Public Health Emergency, the highest level.1<\/a><\/sup> The centralized treatment of all confirmed patients, suspected patients, and close contacts of confirmed cases kept many people in quarantine. The local COVID-19 pandemic was controlled by mid-March and Wuhan reopened on April 8, 2020.2<\/a><\/sup> However, the strict restrictions for COVID-19 prevention dramatically reduced all economic activities in China.<\/p>\n After the reopening, cases continued to break out in different places around the country. As a result, China implemented a set of strict pandemic control policies. For example, any community or building with an infected individual would be classified as a high-risk area where inhabitants were forbidden to go out. This \u201cZero-COVID\u201d policy was implemented in 2021 and continued through the first three quarters of 2022.<\/p>\n In the meantime, the pressure for the government to ease Covid-restrictions mounted. Then, in November 2022, China suddenly eased the restrictive measures, abolishing \u201cZero-COVID.\u201d This change was wide-sweeping and included canceling the classification of risk areas, canceling the suspension of businesses, and letting patients be treated at home instead of in isolation areas. As a result, China experienced an infection peak in the fourth quarter of 2022 causing another sharp drop in economic activities. After that, China gradually returned to pre-pandemic life in the first quarter of 2023.<\/p>\n Stringent public health measures were in place for almost three years in China. The economic activities of enterprises, especially small and micro enterprises, were severely impacted. The costs of continuing this stringent policy were enormous. Over the past three years, the tight public health measures and lockdown have had a large, negative impact on growth in China.<\/p>\n Since the economic reform and opening of the Chinese economy in the late 1970s, economic growth in China has been in the range of 9%-10% annually on average, regarded by many as the \u201cChina Miracle.\u201d However, such dramatic growth started to slow starting from 2012. GDP growth steadily declined to 7%-8% from 2012-2015, slowing to 6%-7% from 2016 to 2019, as shown in Figure 1.<\/p>\n Figure 1: China\u2019s GDP<\/strong><\/p>\n3. Economic growth and international trade<\/h5>\n