(Countering new crown pneumonia) China's economic war "epidemic" record: Will an overseas epidemic escalate "second shock" the Chinese economy?
China News Agency, Beijing, March 4th (Reporter Wang Enbo) While positive results have been achieved in China's epidemic prevention and control, while the social production order has gradually recovered, overseas epidemics have escalated. People can't help but worry about whether the Chinese economy that is "restarting" will encounter a "second shock"?
As of 10:00 on March 4th, Beijing time, the cumulative number of newly diagnosed cases of new coronary pneumonia outside China exceeded 12,000, and the number of newly confirmed cases overseas also surpassed China for many consecutive days.
The virus spreads everywhere, and its economic impact continues to ferment. Liu Ying, a researcher at the Chongyang Institute of Finance at Renmin University of China, told reporters from the China News Agency that the epidemic will have a significant impact on global trade, consumption, and investment. More countries are expected to take strict measures to restrict personnel movements and investors are expected to become more unstable .
The Organisation for Economic Cooperation and Development has warned that global economic growth will slow sharply in the first half of 2020 and will reduce its full-year growth forecast to 2.4%. The World Trade Organization predicts that the global trade in goods will continue to weaken in the first quarter of this year and may weaken further due to the impact of the epidemic.
Under this circumstance, some analysts believe that the epidemic will lead to a decline in global aggregate demand and that China's external demand will face a sharply reduced risk. In response, Zhu Jianfang, the chief economist of CITIC Securities, frankly stated that the above negative effects do exist, but their impact on the Chinese economy should not be overestimated.
On the one hand, the changes in export and import trends are usually highly synchronized, and the reduction in China's goods trade surplus may not be as large as that of exports itself. The demand for exports will also partially offset the impact of the decline in global aggregate demand.
In addition, in the "troika" driving China's economic growth, consumption and investment have become the absolute main force, and economic driving factors are dominated by domestic demand. Even if the contribution of net exports declines, it will not produce substantial economic fundamentals in China change.
"Compared with demand shocks, the disruption of the supply chain will have a more negative impact on the global economy." The chief economist of Evergrande Group, Ren Zeping, worried that the global supply chain crisis was continuing to linger. With China's orderly resumption of work and production recently, the center of its contradictions seems to be shifting overseas.
Taking Japan and South Korea, where the current epidemic is severe, as an example, Ren Zeping said that as an important part of the industrial chain, the total sales volume of Japan and South Korea's semiconductor material market in 2018 reached 16.41 billion US dollars, and the total sales value of the semiconductor equipment market reached 27.18 billion US dollars. The worsening epidemic will cause major shocks such as global semiconductor raw material shortages, core component shortages, and rising manufacturing costs, and China will also be affected.
But the crisis also has a turn for the better. Under the epidemic situation, whether China's related industries can accelerate the pace of transformation and upgrading and strengthen the independent supply chain support is the key to turning crisis into opportunity.
Facing the "second shock" brought by the escalation of overseas epidemics, observers generally believe that China can moderately increase the scale of economic stimulus, but policy formulation must be more rational and pursue sustainable and high-quality growth.
Taking infrastructure as an example, it has always been the main force of economic stimulus policies. The importance of expanding domestic demand through infrastructure investment is particularly important in the case of short-term consumption suppression by the epidemic.
CICC's chief economist Liang Hong said that China's infrastructure investment is still inadequate in many aspects, and the public health sector is one of these outbreaks. Although the steady growth of infrastructure investment is irreplaceable, it is not appropriate to rapidly increase infrastructure demand in the short term. Relevant investment should focus on making up for shortcomings and leaning on areas such as public health, big city infrastructure, and environmental protection.
Lu Ting, Chief Economist of Nomura Securities China, also believes that the scale of stimulus policies must be carefully considered to avoid a new wave of inefficient infrastructure investment. As long as the current rescue and resumption policies are in place, some of the demand that has been delayed after the epidemic will be delayed, and unfinished production orders will also be completed by companies working overtime. The economy will inevitably recover, and to some extent make up for losses during the epidemic.
While coordinating its own prevention and control and development, China actively participates in international cooperation and contributes within its ability to contribute to the overseas epidemic. It also helps move forward the defense line against shocks.
In Liu Ying's view, all parties should use G20, SCO, APEC and other platforms to fully strengthen policy coordination and cooperate closely. "This epidemic is a common test for the whole world. If countries cooperate well, it will be possible to minimize the impact of the epidemic on the economy." (End)