Comment: The impact of the new crown epidemic on Chinas economy

At the end of 2019, a new type of coronary virus (COVID-19) outbreak of Wuhan in China quickly affected all parts of China and some overseas regions across China.This epidemic coincides with the Spring Festival holidays, which directly affects major domestic consumption and service industries such as accommodation, retail, catering, entertainment and tourism. Delayed resumption will also have a certain impact on industrial production and even exports.In the real economy, especially relatively fragile private enterprises, the brunt.

In the first quarter of 2020, China's GDP (GDP) growth rate may maintain only about 3%to 4%.Considering the adverse booster policy effect, the Chinese economy will increase by about 5.6%in 2020, 0.4 percentage points lower than expected, but it will not decline.In view of the huge economy of China's economy, its decline in the short term will have a certain negative impact on the global economy, especially the surrounding countries economy.

The difference between the two epidemics and the same

In general, there are many differences between the new crown epidemic and the SARS epidemic in the environment, scope of influence, and response measures, but the impact on the financial market has similarities.

The difference is that the external environment is very different.Compared with the Savas epidemic, the international background of this epidemic is even more severe.Prior to the epidemic in Shats in 2003, the economy of China and East Asia had completely got rid of the shadow of the Asian financial crisis and was in the stage of recovery and rising. At the time of this new crown epidemic, globalism was rising, and economic and trade frictions between China and the United States still had economic and trade frictions.

Although China and the United States signed a first -stage trade agreement in January 2020, the tough attitude towards the United States has not changed fundamentally, and Sino -US relations still have uncertainty.Not only that, the Shats epidemic has not been listed by the World Health Organization as an internationally concerned public health incident.

The impact of the epidemic on industrial production is different.Under the background of Sino -US economic and trade friction, the China Manufacturing Purchasing Manager Index (PMI) has just shown signs of recovery recently, but affected by the impact of the epidemic, the delay of the company's resumption, and the blocking of the logistics network, it is expected to be industrial production in February and MarchIt will face a new round of pressure, which is also the path of impact from the first wave of impact (to service industry) to the second wave (for manufacturing).If you do not take measures to support the recovery of logistics and industrial production in a timely manner, the impact on the industry will be higher than the impact on the service industry, and it will exceed the impact of the Shas epidemic on the industry.

The impact of the epidemic on the tertiary industry is different.The more serious period of Shas was from April to May 2003, and the peak period of this epidemic occurred in the Spring Festival consumption season, which impacted the tertiary industry the greatest.Because the third industry currently accounts for 54%of GDP, more than 42%in 2003, the impact of this epidemic on GDP will also be greater.It is estimated that the retail sales of the Golden Week on the 7th of the Spring Festival will be reduced by 50%to 500 billion yuan (RMB, the same below, about S $ 99.5 billion).Compared with the box office revenue of nearly 10 billion yuan (1st to 15th) for two consecutive years from 2018 to 2019, the box office revenue of the same period in 2020 is expected to be almost unparalleled.

The government can implement the space for macro policies.In 2003, the Chinese economy was in the stage of simultaneously recovering the real estate cycle and the investment cycle, and fiscal policies and monetary policies exhibited more space.At present, China's economy is facing structural transformation, economic growth has continued to decline, corporate debt and local debt are high, RMB faces a certain depreciation pressure, fiscal deficits have increased from 2003, and pork prices affect the level of inflation.The exhibition space for fiscal policy and monetary policy.

The impact of the two epidemic on the world is different.In 2003, China GDP accounted for only 4%of global GDP, and China's economic fluctuations have limited impact on global.However, in 2019, China GDP has accounted for 17%of global GDP, and its contribution to global economic growth has risen to 30%.In this case, the epidemic has led to the slowdown in China's economic slowdown and foreign trade, investment and exchanges, and the effect of overflowing the global economy cannot be ignored.For example, the international tourism market, especially neighboring countries, highly rely on the expenditure contribution of Chinese overseas tourists.In 2018, Chinese tourists spent 5.9%of the country's GDP in Cambodia, 3.6%and 3.4%in Vietnam and Thailand, respectively, and 1.3%in Singapore.Because the epidemic blocked the exit of Chinese tourists, the tourism revenue of these countries in the first half of 2020 will decline significantly.

Similarly, the exchange rate and the stock market trend are basically close to the two outbreaks.In 2003, the exchange rate of the RMB against the US dollar remained stable.At present, the marketization of exchange rates is relatively high, and the RMB is facing a certain depreciation pressure. However, considering the impact of capital management and boost measures, the depreciation of the RMB will be relatively limited. The exchange rate against the US dollar will still be roughly stable. It is expected that the maximum depreciation of about 7.05 in February is expected to be around 7.05.With the improvement of the epidemic, the RMB exchange rate will gradually stabilize and return to about 6.90 at the end of the year.The stock market trend will be similar to 2003. In the early days of the epidemic, there was a possibility of rebound.Structural opportunities mainly appear in related sections of medical and network.

At present, the new crown epidemic will bring some challenges to the Chinese economy and the global economy.Our model calculation will decrease by 0.8 percentage points to China's economic contribution in 2020, and the contribution of net exports will decrease by 0.7 percentage points, and the contribution of investment will increase by 1 percentage point.In 2020, the overall GDP growth rate was 5.6%, which was 0.4 percentage points below the normal value, but the economy would not decline.

How to deal with the new crown epidemic in the next step

In the current situation of some people's panic and pessimism of corporate spreads, unconventional measures should be taken in time to boost morale, support economic growth, and avoid affecting the spread from entity to the financial system.

1. Ensure that the National Transportation and Logistics Network is unblocked.It is strictly forbidden to destructive blocking roads to provide logistics guarantee for disaster resistance, people's living security, and corporate resumption of work. Avoid the rapid rise in producers (PPI) caused by the structural shortage of life and production data in 2003.

Second, the orientation reduction 100 basis points.This should not only help strengthen market confidence, but also ensure that the funds are actively flowing into industries and regions with a greater impact of the epidemic, and avoiding the broken capital chain of enterprises, especially SMEs, especially small and medium -sized enterprises.

3. Help enterprises through the current difficulty.For industries that are more affected by the epidemic, such as transportation, tourism, catering, and accommodation, they should be supported from various aspects of taxes, finance, etc., and provide asthma opportunities and space for their future development and transformation.

Increase the fiscal deficit rate to 3.2%in 2020 to ensure that sufficient financial funds are used to cope with epidemic conditions, investment and assistance to small and medium -sized enterprises.

Fourth, help the impact employees transform.The epidemic has the greatest impact on the low degree of skill complexity and unable to transfer employees.For these employees, skill training in the new situation should be strengthened to help them master new skills as soon as possible and re -enter the job.

Fifth, help traditional enterprises transform.Taking this epidemic as an opportunity, according to the direction of the industry's economic development, traditional enterprises are encouraged to actively accelerate the transformation of digitalization and online business.

6. New industries with the demand for market outbreaks should increase investment and guidance.In particular, they attach importance to the investment and development of 5G, artificial intelligence and digital economy, further support the development of online and intelligent unmanned services, and create new demand and employment positions.

7. Stimulate the vitality of the private economy.Only by stabilizing the private economy can employment and stabilizing the economy, it is necessary to further increase its support for the private economy, including reducing tax burden, properly relaxing financing conditions, and expanding emergency funds for assistance.In essence, it is necessary to completely treat private enterprises and thoroughly eliminate the concerns of private enterprises' investment and development. Only China's economic toughness and efficiency can further improve, and they can better withstand the impact of any storms.

(Author Li Wenlong is the dean of the ASEAN Economic Research Institute, Zhang Guoli is a senior researcher at the institute)