The impact of CoronaVirus Disease 2019 (COVID 19) on the Chinese economy has been huge. But it is expected to bounce back, said experts. Some level of lag is expected as well, even as many businesses try to get back on their feet.
Speaking at the ‘Combatting Coronavirus’ discussion that took place in Mumbai, Zheng Bin, CEO of the Industrial and Commercial Bank of China (ICBC) India, said, “The impact of the virus was huge. But there were several measures that were taken to contain the impact of this on the business by the government.” The People's Bank of China has also called for measures to increase liquidity among businesses. “ICBC is also helping the businesses (small and medium enterprises) by extending loan payment period,” added Zheng. Except in Wuhan, businesses in the rest of China are operational and trying to attain normalcy.
Another expert at the same discussion, ‘Combatting Coronavirus’, Madan Sabnavis, Chief Economist, CARE Ratings, said, “There has been a lot of movement in the world economy, post the outbreak of CoronaVirus. Everything has not been good in the economy.” He pointed out while the crude oil prices declined, gold has been the biggest gainer in this. Sabnavis stressed, “All these trends are pointing towards recession.” With China closing down, the supply chain has taken a hit. “Such a global crisis (the COVID 2019 outbreak) results in a high-level of protectionism among economies. This could have a negative impact (on globalisation).”
From China’s point of view, it will face losses in export business. But it is assumed that closing down of China does not fully lead to opening up of alternative markets, which would definitely be the case as other countries that were importing say textiles or pharmaceuticals from China would be able to do so from India. Quoting Care report, Sabnavis stated, “It is hence assumed here that 80 per cent of the exports to China would be lost as they cannot be replaced.”
While Sabnavis felt that COVID 19 will have a deflationary effect on the Chinese economy; Zheng argued with a statement that with supply falling and demand soon picking up, the inflationary impact will make headway in the economy. Supporting Zheng, Rajiv Ranjan, Assistant Professor, College of Liberal Arts, Institute for Global Studies, Shanghai University, said, “Supply chain will be impacted. So, the chances of a rise in prices will be more.”
Ranjan feels the biggest challenge for China will be to keep the stereotype at bay. “There is so much fake news that is hurting the country," revealed Ranjan. He went on to add that China has been making use of social media like WeChat, Weibo, etc. to create more awareness about COVID 19.
Other than social media, China is also exploring technology like artificial intelligence, big data, robotics etc, to beat the virus, stated Rajan. Adding to it, Zheng stated the use of technology during the outbreak can be seen as an opportunity in making.