Ahead of the curve

As Chinese economy sparks into life again, it will serve as a stabilizer and powerhouse for the global economy

The strict measures to contain the spread of the novel coronavirus in China, including the lockdown of Wuhan in Hubei province, social distancing and quarantining, along with the resulting suspension of economic activities, have achieved significant results. There have been very few domestic-originated cases of infection for quite some time in the Chinese mainland. That is, the epidemiological curve of the novel coronavirus is on the downside of an inverted V-shape in China. On the other hand, the epidemiological curves for other countries are still on the rise, with the peaks yet to come.

Similarly, while the Chinese economy is poised to recover, the economic slowdown of the world, particularly other major economies, is becoming more severe. Against the backdrop of economic globalization and given the global epidemiological curve of the virus, the Chinese economy is unlikely to recover following the typical V-shape trajectory. No matter V-shape or U-shape, however, China is rapidly resuming its economic activities.

According to the purchasing managers' survey designed by the National Bureau of Statistics to collect data for the calculation of the purchasing manager index (PMI), as of March 25, 96.6 percent of the surveyed large and medium-sized enterprises have resumed production, which shows a 17.7 percentage points increase comparing to that on Feb 25. As a result, China's PMI in March was 52 percent, which is a significant increase compared to that in February and is above the entrepreneurs confidence threshold of 50 percent.

That is, despite the difficulties facing the world because of the dim economic prospects, China is taking the lead in economic recovery. At a time when humankind is facing the threat of common enemy－namely, the coronavirus pandemic, that China, the world's second-largest economy, is leading the economic recovery is not a zero-sum game. Nor should economic activities be understood as a matter of competition among countries as in normal times.

In recent years, China has contributed about one-third of the world's GDP growth. So, if China can revive its economic performance this year, it will serve as a stabilizer and powerhouse for the global economy in the face of the pandemic and after. That would help the world in the following ways.

First and most immediately, it would be able to supply medical apparatus and instruments and medical services that not only the developing countries but also the developed countries are in urgent need of. China is one of the biggest suppliers of medical apparatus and instruments and medicines in the world. It is also a center for manufacturing and exporting active pharmaceutical ingredients, for the research and development of medicine, and for training doctors, nurses and pharmacists. Having fought the novel coronavirus epidemic in the past few months, China has accumulated a wealth of experience, which combined with its abundant medical resources, means that China is perhaps the only country that is both willing and able to lend a hand at the moment when many countries need help. In more grave occasions as the pandemic develops, China is also willing to implement humanitarian assistance to countries in great need and with low-income status.

The second is, it would help maintain the global supply chains and safeguard economic globalization. One of the severe fallouts of the crisis is the temporary disruption and possibly the permanent destruction of some global supply chains, which is caused by either suppliers or purchasers stopping production during, and possibly, after the virus pandemic. China is the only country in the world with all types of industries in the International Standard Industrial Classification of the United Nations, including 41 in two-digit categorization, 207 in three-digit categorization, and 666 in four-digit categorization. China's own economic recovery can help repair the global supply chains, preventing the retrogression of economic globalization.

Third, it would generate demand for imports of consumption goods and investment from other countries when the world as a whole is recovered. When life gets completely back to normal in China, three factors will spur consumption. One, as soon as the epidemic is over, people will spend more on the commodities that have been hit by the epidemic and containment measures. Two, when some goods and services are suppressed by the virus epidemic and countermeasures, others become substitutes. Three, the pandemic has induced new consumption relating to public hygienic behavior and social distancing.

Meanwhile, there are reasons to expect the implementation of massive investment in the wake of the epidemic in China. One, to counter the economic contraction, sufficient liquidity is being released aimed at inducing more investments at the enterprise level. Two, some large-scale construction projects are planned as a necessary part of the stimulus package, aiming to prevent unemployment and overcome economic development bottlenecks. Three, the country will seize the opportunity of the creative destruction to upgrade its manufacturing. China will strengthen new infrastructure construction with the focuses on areas such as 5G networks, big data centers and artificial intelligence.

The common enemy of the world is the novel coronavirus, and it is the shared aspiration of all countries to end the pandemic and restore economic growth. Like it or not, it is an indisputable fact that the outcome of China's economic recovery will largely determine the prospects for the world economy.

The author is the vice-president at the Chinese Academy of Social Sciences and chairman of the National Institute for Global Strategy at the CASS. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.