Corona Lockdown: Will China Overcome Economic Challenges?

Even though economists say that China’s economic data cannot always be trusted, but now a new difficulty has come in front of them. Now they are not getting any data.

On Friday, China said that it is not setting any target for economic growth this year.

This decision of China is unprecedented. This is the first time since these targets started printing in 1990, when the Chinese government has not set the target of economic growth.

Not setting the goals of economic growth is an acknowledgment of how difficult economic recovery will be for China in the post-Corona virus epidemic.

And although recent data suggests that China is heading towards a phase of lethargy, it is an uneven recovery.

Start with good news

Factories have started functioning for the first time since the epidemic hit China. The rate of industrial production in April has been better than expected at 3.9 per cent. Strict lockdown was implemented in China earlier this year. At that time, industrial production had declined by 13.5% in the first two months of the year.

Along with this, many such figures have also come which are amazingly strong. The kind of recovery indicated by these figures is called V-shaped recovery in the language of economists.

The rapid recovery in economic activity after a sharp and major initial decline is called V-shaped recovery.

According to investment bank’s JP Morgan, “The production of six major power generating companies in China has been restored once again after the Golden Week holiday of May. It currently remains 1.5 percent above its historical average. The data shows that the demand for electricity in the country has been restored to normalcy. “

After the lockdown, China’s skies became pollution free. Now, after the pace of economic activities in the country, clear skies have again disappeared.

Recent levels of air pollution in China have gone up compared to the same time last year. For the first time since the onset of the corona virus, a boom in industrial emissions is being recorded.

It is known that the business environment in China is slowly returning to normalcy.

But, everything is not normal and this shows that it is not easy for the rest to get their work back on track.

Recent statistics of retail sales are showing how difficult it is to bring people to the shops and buy them.

Sales in April were down 7.5 percent, which was better than in March. Despite this, sales are still not the same as they are when the economy is running full force.

Many people in China are still worried about the second wave of infection and they are not spending money as before.

In such a situation, there should be no surprise as to why China has not given a growth target for this year. The government is well aware that it is difficult to estimate the depth of this crisis.

Rising Unemployment

In these difficult situations, unemployment figures are proving to be more troublesome. The unemployment rate has risen marginally to 6 percent in April compared to March, which is close to the historical record of unemployment.

But, most economists say that the actual figures are worse.

The think tank Capital Economics says that about 20 percent of migrant laborers have not returned to the cities, and in such case, the real unemployment figure could be up to double.

Even though the communist mouthpiece of the communist mouth of China, the Global Times, does not usually tire of praising China’s economy, it has also pointed to the serious condition of unemployment.

It has said that this year it will be almost impossible for Chinese employees working in the private sector to earn salary like 2019.

Things will go bad before they improve

Peking University professor Justin Ufu Lin cited a survey of Tsinghua University in March, saying that about 85 percent of private industries would struggle to sustain themselves for the next three months.

“Bankruptcy of enterprises will increase unemployment”

Many people work in government companies in China. In such a situation, China’s economic system is in a better position to handle the unemployed than America.

People of China have more savings. They have much better family support and many migrant laborers have land in their native towns where they can earn money to meet their daily needs.

Wang Huiao of the Center for China and Globalization says, “Yes, there will be some difficulties, but people outside of China probably don’t know how we see the difficulties and problems. People in China still remember the days when this country was very poor. This is not much earlier. “

This round is different

The Communist Party has always said that achieving the growth target shows how well China is doing.

But, this time is definitely different. There is no target. In such a situation, it is clear that China is going through the most difficult economic environment in recent years.

China has faced different economic difficulties before. For instance, there were large scale layoffs in China in the nineties.

At that time, the economy was dependent on the dominance of government companies. A large part of the working population was engaged in these companies.

When the economy slowed down, these companies laid off millions of employees. There was a sharp rise in the unemployment rate in the country. According to the National Bureau of Economic Research, at that time the unemployment rate was increasing at the rate of about 1 percent every year.

In 1995, about 60 percent of the working population was working in government companies. This number came down to 30 percent in 2002.

But, China recovered and the private sector took the initiative in giving jobs to the youth.

George Magnus, Associate of Oxford University’s China Center, says that this time things are different. The private sector is also under pressure. He says, “At that time no one was talking about trade war. Companies from all over the world were giving manufacturing work to China.”

He explains, “Now the whole world is going through an economic difficult time. Because of this, consumer demand is over. There is nothing left for foreign trade. The difficulty that China faced before the epidemic came; Corona has come and increased them many times. “

‘Chinese Dream’ under pressure

For the past 40 years, the Communist Party of China has been successful in keeping its promise to the citizens of the country. That is the promise – we will improve the quality of your life and you support us so that we can put China on the right path.

In 2012, Xi Jinping polished this social contract into a Chinese dream.

2020 was going to be an important part of this grand plan. This year, China would completely eradicate poverty and the quality and standard of life of millions of people had to be elevated.

However, Corona has put this social contract at risk.

This health crisis has emerged as a greater threat to the social stability of the country than any other economic crisis in the history of the Communist Party of China. There is no longer a guarantee of success for millions of youth as much as their parents.

For this reason, economic recovery in China is very important. Also, the absence of a growth target is giving the government the necessary flexibility to make a plan.