About SIIS
Founded in 1960, the Shanghai Institutes for International Studies(SIIS) is a government-affiliated high-caliber think tank dedicated to informing government decision-making by conducting policy-oriented studies in world politics, economics, foreign policy, and international security. SIIS maintains intensive and extensive exchanges and cooperation with research institutions at home and abroad, bolstering China’s international influence and soft power.
SIIS boasts an authorized size of 106 full-time research fellows and staff, including 60% senior fellows. SIIS was ranked one of the top ten Chinese think tanks In 2006, and one of the top ten global think tanks (non-American) in 2008. SIIS comprises seven institutes and six research centers, namely, the institute for global governance studies, the institute for foreign policy studies, the institute for world economic studies, the institute for international strategic studies, the institute for comparative politics and public policy, the institute for Taiwan, Hong Kong& Macao Studies, the institute for data processing and studies, the center for American studies, the center for Asia-Pacific Studies, the center for Russian and Central Asian Studies, the center for West Asia and Africa studies, the center for European studies, and the center for maritime and polar studies. In addition, SIIS is an institutional member of the Shanghai International Strategic Studies Association and the Shanghai International Relations Association.
Global Review (bimonthly, Chinese) and the China Quarterly of International Strategic Studies are the two flagship journals of SIIS and have become a prestigious academic platform for domestic and international scholarship.
© 2020 by Shanghai Institutes for International Studies. All rights reserved
Shanghai Institutes for International Studies
195-15 Tianlin Road, Xuhui,
Shanghai, PR.China
021-54614900|www.siis.org.cn
This report is co-authored by
Preface Author
CHEN Dongxiao, President of Shanghai Institutes for International Studies
Contributing Authors
YE Yu, Ph.D., Senior Fellow, Institute for World Economy Studies, SIIS
WANG Yuzhu, Ph.D., Senior Fellow, Institute for World Economy Studies, SIIS
XUE Lei, Ph.D., Research Fellow, Institute for World Economy Studies, SIIS
Translators
ZHANG Zhexin, Ph.D., Deputy Chief Editor, China Quarterly of International Strategic
Studies(CQISS), SIIS
YANG Li, Editor, China Quarterly of International Strategic Studies(CQISS), SIIS
Designers
ZHANG Jun, Department of International Exchanges, SIIS
GE Jieyi, Department of International Exchanges, SIIS
China Is Confident in Revitalizing Its Economy Amid the COVID-19 Outbreak
With increasing effect of China’s efforts to fight against the COVID-19 epidemic, the Chinese government has made timely readjustment in order to balance the counterepidemic endeavor with economic and social development, which helps minimize the impacts of the epidemic and accomplish the national goals in all walks of life set for 2020. As a result, economic and social activities are starting to revive in most parts of the country except for Hubei province and Wuhan city.
While the dynamics of China’s ongoing battle against the epidemic continue drawing people’s attention, the international community has been ever more concerned about the economic impacts of the epidemic on China and the world at large. For instance, what risks and potential opportunities will the epidemic bring to China’s and world economy in the short run? How effective are the policies and measures adopted by the Chinese government to minimize its economic impacts? To what extent will the epidemic spur China’s reform of its economic system and further opening-up in the mid- and long-term? And what are the spill-over effects of the epidemic on world economy?
Obviously, China is very different from what it was 17 years ago (when the SARS epidemicbroke out) in economic weight, position in global industrial and value chains, and its contribution to the world economy. The political and economic situations of the world have also undergone substantial changes. Thus, the historical analogy can only offer limited insight. We need a more comprehensive and dynamic perspective in answering the abovementioned questions, which is seen in the latest report by the task force on world economy at Shanghai Institutes for International Studies.
The report points out that the multitude of the economic impact from the COVID-19 outbreak depends on how long it takes to keep the virus under full control. Although the situation in Hubei and Wuhan remains grim, things are looking up in other parts of China, where local authorities are trying to strike a balance between fighting the epidemic and reviving economic life with tailored measures. Therefore, the epidemic is very hopeful to be kept in check within the first quarter, with controllable impacts on China’s economy for the whole year — despite its severe short-term damage. Nevertheless, the report warns of the difficulty for small and middle-sized enterprises (SMEs) to resume full operations and the potential long-term effects of indefinite restoration of industrial production in worst-hit epidemic areas on the global supply chains. Meanwhile, it is believed that the epidemic will bring new opportunities for health-care, online services, and some other industries.
This report suggests observing how effectively the Chinese government’s counterepidemic economic policies will turn out, so as to assess the short-term impacts of the epidemic on China’s economy. There are two kinds in China’s economic policy toolkit: one is for short-term relief (such as various fiscal, financial, monetary and tax policies, and reduction of costs of labor), in order to help enterprises, including SMEs, to overcome the temporary difficulties in capital and labor caused by the epidemic. The other is aimed to provide lasting policy support for enterprises. A number of policies — such as purchasing emergency supplies with China’s foreign exchange reserves to reduce government spending, further opening China’s capital market, and fostering a new capital-labor consensus through social mobilization to facilitate enterprise operation — are recommended in the report.
This report believes that China’s fight against the epidemic will generate fresh momentum for its further reform. First, it helps foster a national consensus on highquality development. Second, it helps enhance China’s national governance capacity and comprehensive capabilities in countering social and economic risks, since the country’s weaknesses in prevention and control of major public health emergencies — as exposed during the COVID-19 outbreak — need to be mended through deeper reform on all fronts. Third, it helps strengthen China’s digital economy, optimize its economic structure, and generate new momentum for economic growth. To meet the many new demands created by the epidemic, China’s digital economy is expected to “fast-forward” in the near future.
Based on the estimates of leading international economic institutions, this report also explores the potential impacts of the epidemic on the world economy and China-U.S. economic relations. Given China’s economic size and key position in global industrial chains, the immediate spill-over effects of the epidemic do not only lie in falling prices of global commodities as well as declining services trade such as in tourism and international education, but also in unexpected disruption of global supply chains.
It is necessary to note again that happiness and hazards are shared by all nations in the era of economic globalization. As Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), recently remarked, “Global cooperation is essential to the containment of the COVID-19 and its economic impact, particularly if the outbreak turns out to be more persistent and widespread.” In all, the actual impacts of the COVID19 epidemic on the world economy depend on how soon China can tame it and how closely the international community will bind together in the face of this common challenge to mankind.
Chen Dongxiao
President, Shanghai Institutes for International Studies
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