Employees work at the workshop of a technology company at Xingtai Economic Development Zone in Xingtai City, Hebei Province, on May 14, 2020. (Photo: Sipa)
China's economy enjoys strong resilience and flexibility despite the coronavirus, and is capable of retaining a relatively high rate of growth for the long run, according to a new report released on Tuesday.
The Annual Report on the Development of China's Investment 2020, released by JIC Institute of Investment Research, said while the coronavirus dealt a huge blow to China's economic activity, it won't change China's strong fundamentals for sound growth. And China's economy is gradually returning to normal, with the help of government measures to resume work and hedge against the globally spreading COVID-19 outbreak.
The report admitted China was simultaneously hit by supply and demand shocks due to the disruptions from the outbreak, and a wide range of sectors such as household consumption, investment and export have been hit badly during the epidemic.
Zhang Zhiqian, head of the JIC Institute of Investment Research, said the disruptions to the economy are mainly due to external shocks, and the economy will gradually recover when the outbreaks are contained.
"That also explains why the Chinese government is not resorting to massive stimulus measures. Instead, the government is using policy tools such as pursuing a proactive policy and taking key measures to resume work and production and contain the epidemic," Zhang noted.
"The ongoing coronavirus outbreak will transform the way people produce, work and live. The internet, artificial intelligence, telemedicine and other digital fields will see robust growth in the future. To maintain economic stability, China is likely to speed up new infrastructure construction, offering huge investment opportunities in the fields of 5G, AI, internet and other related digital sectors," Zhang added.
The report said new infrastructure will become a key driving force to boost economic growth. It estimated total retail sales of consumer goods will continue to grow in 2020, especially driven by the consumption of electronic products such as 5G smartphones.
In particular, the report has seen new growth opportunities in outbound investment, especially in countries and regions related to the Belt and Road Initiative.
"We suggest companies keep an eye on overseas markets such as the ASEAN countries, Japan, South Korea and India," the report said. "To gain a competitive edge globally, companies need to focus on cutting-edge technology field like AI, biotechnology and blockchain, which will help optimize the supply chain and improve product quality."