First affected by the Covid, China is the first country to have experienced deconfinement. We can learn from it: the return to normal is much longer than we imagined and the economic recovery more complicated than expected.
The first country affected by the virus, China is the first to experience deconfinement. And there are lessons to be learned…
Yes first of all on the economic damage of the virus. China has just announced that it suffered a collapse in growth of almost 7% in the first quarter. To properly measure the extent of the shock, we must remember that the Chinese economy, the second in the world, was spinning at a rate of + 6% before the virus. So that's the shock: growth collapsed by 13%. At home, we are announced a fall of 8% this year but beware, it could be worse. First lesson: the shock is much more severe than we think. Second lesson: the way out of the crisis is also longer.
Even in China, where things are going fast, the recovery is slow…
Yes, it is said that the economy is recovering, but in fact it would run at best at 80% of its capacity. A fifth of the economy is still at a standstill. Why ? First, because external demand has collapsed: exports have stalled, of course. However, we too are an open economy and we will also be penalized by the lack of external outlets for long months. Finally the other reason which slows down the recovery in China, it is its debt, which represents 250% of the GDP (with us, it is 100%). During the 2008 financial crisis, China saved its economy with a huge $ 600 billion stimulus package. But it has less room for maneuver today ... like us. As Edouard Philippe said, the “return to life before” is not for tomorrow…