China's GDP in the first quarter has declined by 6.8 percent compared to last year due to the unprecedented impact of the coronavirus outbreak, while Hubei, the previous epicenter, saw a shrinking of nearly 40 percent. However, the pandemic, with phased impacts, did not and will not change China’s sound long-term economic fundamentals thanks to its strong domestic marketing and smooth economic cycle.
Since March, the decline of China's main indicators has significantly narrowed, showing a high resilience in the economy. Thanks to the orderly resumption of production and work, the service industry and high-tech manufacturing industry have been boosted. Nevertheless, the challenges the country faces remains critical due to the spreading pandemic and intensified economic downturn risks in the outside world. Therefore, the current economic recovery, to reduce uncertainty, should find a balance between economic progress and epidemic stability.
Chinese President Xi Jinping chaired a Political Bureau of the CPC Central Committee meeting on April 17, and urged them to take the initiative to advance work resumption while continuing the epidemic fight, in a bid to ensure that the epidemic will not rebound while steadying the economic fundamentals and securing people's basic livelihoods.
To stabilize the economy, expanding domestic demand is the top priority. In the current situation of insufficient external demand as the International Monetary Fund (IMF) gave a prediction on the global economy, domestic demand is expected to provide support for China's economy through unleashing the potential of consumption and expanding effective investment.
In the next phase, potential of consumption will be further released both in the promotion of traditional sectors such as automobiles, home appliances and new sectors such as 5G and new energy vehicles, which will help drive the upstream and downstream industry chain and give a multiplier effect on the economy. What's more, as highlighted in the political meeting, investment in new infrastructure and renovating old and dilapidated residential areas are key to grow the domestic demand, as the former will help China facilitate innovation and improve weak areas in economic and social development, while the latter will fully leverage social capital and further improve the efficiency of the use of fiscal funds. China has planned to renovate 39,000 old residential areas covering 7,000,000 residents.
Borne the price of short-term economic pressure to guarantee the safety and health of 1.4 billion people, China has witnessed a gradual and stable recovery in the economy.
Now facing the changing pandemic at home and abroad, China needs to increase awareness of risks, maintain strategic focus, ensure pandemic stability before pursuing economic progress, to promote the smooth and healthy recovery of the economy as well as to successfully achieve the annual economic and social growth target.