China managed to well control the COVID-19 early on and register a positive economic growth in 2020, which are good signs for global economy, said Cai Daolu visiting Senior Fellow of the National University of Singapore Business School.
He said “It is quite a performance in such a difficult year,” when commenting on the data that China registered a 2.3 percent GDP growth in 2020 & became the only major economy that recorded a positive growth in the year amid the pandemic.
China’s strong economic performance in 2020 has been translated into two important features, namely “a stable labor market” and “a rising disposable income” in China, Cai said.
With a strong central government coordinating the efforts with the local governments, China has been very committed and efficient in containing the spread of the virus, which creates a safe environment for household spending and the labor force’s return to work, he said.
“The key crucial element (for the economic performance) is the containment of the virus that grants confidence to the population,” Cai said.
Other elements also apply.
As some countries tended to turn inward and closed their doors amid the pandemic last year, China reaffirmed its commitment to trade of goods and services, and to investment, signing the Regional Comprehensive Economic Partnership (RCEP) free trade agreement with 14 other countries, and concluding the negotiations of the China-EU investment treaty.
These multilateral agreements will not only help mitigate the economic damage of COVID-19, but also boost the confidence of investors, thus facilitate global economic recovery, he said. “We need an economically healthy and strong China.”
A lot of travel restrictions have been imposed almost worldwide to control the coronavirus right now, but Cai noted that there’s an urgency for the world to be more connected to combat the pandemic, because the global supply chains are so complex and interconnected, and people need access to goods and services.
“Only in this way can we maximize the provision of goods, such as medical equipment, and take full advantage of our comparative advantages of each country,” he noted.
Touching upon the Chinese Belt & Road Initiative, Cai believed that it aims to connect China with the rest of the world through connectivity and can help build a more integrated globe.
“When countries are more connected, when the transaction costs are reduced, it gives market access to everyone that is part of this network,” he said, adding that the initiative can play an important and transformative role in lifting people out of poverty. Thus, the Initiative can have a substantial economic benefit for the global economy, he said.