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Wang Huiyao: Steps needed to minimize outbreak's impact on economy

Tuesday,Mar 03, 2020

A man wearing a face mask rides a shared bicycle on a bridge over Yangtze river in Wuhan, the epicentre of the novel coronavirus outbreak, Central China's Hubei province, Feb 27, 2020. [Photo/Agencies]

By Wang Huiyao |

President of the Center for China and Globalization(CCG)

Since the outbreak of novel coronavirus pneumonia, both the central and local governments have taken rigorous measures to treat patients and halt the spread of the virus.

The pace of the epidemic shows some signs of slowing down, and points to the progress of outbreak prevention and control measures.

Now it is important to put more efforts into minimizing economic loss caused by the outbreak, while containing the epidemic's spread.

The tertiary sector, especially the tourism and catering industry, has borne the brunt of the economic impact since January. According to the National Bureau of Statistics, the revenue of China's catering industry in 2019 was 4.67 trillion yuan ($666 billion), of which 15.5 percent came during Spring Festival.

The Evergrande Research Institute, a think tank, said the catering industry incurred a sales loss of around 500 billion yuan over seven days during Spring Festival this year because of the epidemic. The ride-hailing industry also suffered huge losses.

According to data from Baidu Maps, on the first day of the Spring Festival holiday, traffic volumes across the country decreased 86.7 percent compared with the same period in 2019. And the demand for travel declined significantly.

Service industries employ a large number of workers, and their employment rate could be significantly affected if the outbreak is prolonged.

The Chinese government has implemented multiple outbreak prevention and control measures, including extending the holiday and delaying resumption of production. This has put pressure on small businesses, which rely heavily on cash flows to maintain daily operations.

In addition, a State Council executive meeting on Feb 18 decided to reduce corporate social security burdens in a phased manner.

The digital economy, meanwhile, has benefited greatly. The new growth areas are online shopping, online education, internet medical care, telecommuting and internet insurance.

Once the situation improves, resumption of work and production as early as possible is vital for stabilizing economic development.

The following steps will be essential to get back on track.

First, quarantine rules should be in line with the corresponding risk levels in different regions in order to help enterprises in low-risk areas to resume production and work.

At present, many communities have restricted the mobility of their residents by reducing their outings and gatherings in order to reduce possible infections.

These steps have helped control the outbreak in many areas and made them relatively safe. In these areas, supportive measures should be taken to help enterprises and shop owners to resume their business.

A technician works on a production line of high-speed trains in Qingdao, Shandong province, on Monday. [Photo by Zhang Jingang/For China Daily]

Second, health certificates could be issued to people not infected with the virus, which can avoid panic and boost consumption. Technologies such as big data should be applied to provide such health documents, which would allow those with the certificates to attend public events.

Many shopping malls, restaurants and cinemas have shut down. Although some are open, people avoid them out of fear.

Third, we should support e-commerce to boost economic growth. With the real economy having been affected because of restrictions, it is time for the internet economy to seize the opportunity.

After preventive measures were taken, people began to shop or study from home, creating a greater demand for online shopping and education.

The need of the hour is for policies that can stimulate the internet industry.

Fourth, considering that the spread of the virus has been controlled to some extent, China should promote international exchanges and work to resolve restrictions imposed by other countries.

The Chinese government has made great efforts to contain the outbreak. So other countries should gradually lift travel restrictions on Chinese.

The outbreak is a public health emergency, as well as a warning and a test. Amid this challenge, we have to learn how to establish and maintain harmonious relationships, which means adhering to sustainable, high-quality economic development.

About Author 

Dr. Wang Huiyao is president of the Center for China and Globalization(CCG), the leading non-government think tank in China, with over 100 researchers and members of staff.

From China Daily,2020-03-03
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