With the right policies, both the countrys short-term growth targets and long-term goal of sustainable development can be accomplished
The novel coronavirus pandemic has severely disrupted normal social and economic activities, posing huge challenges to the country accomplishing the development targets set for this year. No major economy has escaped the shock of the pandemic, and both the pandemic and struggling world economy are impediments to Chinas economic recovery.
China needs to be highly alert to the latest developments of the pandemic in order to make timely responses, and maintain enough patience and focus to keep its bottom line during the economic recovery. That is to say when upholding the general principle of pursuing progress while maintaining stability, it should adapt its recovery arrangements to the changing and uncertain situation and strike a balance in policy choice.
China has been contributing more than 30 percent to global economic growth in recent years. So when other economies are stuck in recession, if the Chinese economy can return to normal growth, it will contribute to other countries and the world as a whole in many major aspects.
When the virus was raging around the world, China was the first to bring the domestic situation under control and reopen its economy. It mobilized its strong production capacity and manufactured urgently-needed medical equipment, protective materials and medicines for other countries. At the same time, China also offered experienced human resources assistance.
The shocks to the world economy brought about by the pandemic also show that globalization is irreversible. While promoting its own recovery, China has helped maintain and repair global supply chains and its huge market provides a strong driving force for global recovery.
China should prioritize employment, peoples well-being and poverty alleviation and strive to realize the tasks set for economic and social development.
The fundamentals sustaining Chinas sound economic growth in the long run remain unchanged and will not change because of the impact of the pandemic. However, there will be some disruptions and the priorities for development need to be identified.
In response to the pandemics strong and sustained impact on employment, more proactive employment policies must be adopted to safeguard peoples livelihoods by stabilizing employment.
Poverty eradication efforts must continue in rural areas so as to guarantee and improve peoples livelihoods. This should be the top priority in this years agenda and we should spare no efforts to make it happen. The pandemic has stopped migrant workers in rural areas from seeking work in towns and cities. Facing this special challenge, unconventional actions are needed to tackle the issues at the local level. The most effective way is for the government to provide all the rural residents who still live below the poverty line with a subsistence allowance.
We should properly handle the relationship between boosting consumption and expanding construction investment when leveraging the super-huge domestic market for economic recovery.
Before the novel coronavirus emerged, the tertiary industry and residents consumption had already become main growth drivers for Chinas economy. But these two pillars have suffered the most direct and severe impacts from the pandemic. Therefore, reopening the service sector and unleashing the vitality of consumption is crucial to resume economic activities, stabilize employment and ensure peoples livelihoods.
Judging from past experience, consumers will be cautious about spending. The government can stimulate consumption through basic policy measures such as ensuring incomes and expanding market potential by promoting innovation in business models, greater differentiation of products in the market and enhancing the accessibility of products and services.
In normal economic conditions, the fundamental way to boost household consumption is to increase employment and incomes as well as by enhancing social security so that people can spend without worrying about future uncertainties. However, after natural disasters and other crises, major measures to boost consumption are needed and they should be basic livelihood guarantee policies supported by government expenditure. Regular relief mechanisms such as a subsistence allowance sometimes fail to respond to disasters in a timely and swift manner, and they cant cover all the people affected by the virus. So more inclusive relief policies should be introduced to realize the target of stimulating consumption on the basis of safeguarding peoples livelihoods.
Amid the special circumstances of the pandemic, investment in large-scale construction projects may be necessary to give impetus to Chinas economic recovery. These should be those infrastructure projects that aim to make up weak links and optimize the economic structure, projects that can improve domestic matching supply chains, as well as enhancing those public health facilities, digital infrastructure projects and those with huge job-creation and multiply-effect potential. However, we should fully learn from past experience and guard against any regression in pollution control and supply-side structural reform in this process. Meanwhile, we should also prevent the tendency of relying on investment for growth and avoid going back to the old development path.
History shows that a crisis can reveal the weak links and structural issues in an economy. By handling the crisis properly, China could achieve both its short-term growth targets and long-term goal of sustainable development.
Of the huge risks posed by the pandemic, the most salient one is incomplete or non-typical urbanization. Urbanization will make an important contribution to Chinas long-term socioeconomic development. So its a pressing task as well as a long-term goal. What needs to be done is to speed up efforts to promote the new-type urbanization with a focus on relocating migrant workers in towns and cities. Household registration reform that allows migrant workers and their family members to settle in cities and towns where they work could lower future social risks, increase the labor supply, cut costs for the manufacturing sector, improve productivity and distribution, expand consumption and promote long-term sustainable development.
The author is the vice-president at the Chinese Academy of Social Sciences and president of the China-Africa Institute at the CASS. The author contributed this article to China Watch, a think tank powered by China Daily.