Driving China’s Post-epidemic Economic Development

The COVID-19 outbreak left a short-term impact on China’s economy. In the recovery period, China’s economic development is being driven heavily by four key factors:

First, a rebound of supply and demand after the epidemic is a general law of economics. According to analysis of historical data, after the end of each epidemic since World War II, supply and demand in each affected country rebounded, which hedged the impact of the epidemic. After the resumption of production, enterprises are organizing their operations to catch up on an accumulated backlog of orders, leading to recovery and rebound of supply. This fundamental economic tendency will be the biggest driving force for economic development in the post-outbreak era.

Second, the epidemic has triggered the development of new industries. In the process of disruptive innovation, some exogenous shocks are often needed to break through the barriers of the old model. As far as telecommuting technology is concerned, the COVID-19 epidemic triggered new demand for it. Traditional office culture and business models in China are highly reliant on face-to-face communication, and a lack of trust in video communication among many stakeholders has curbed the application of new technologies. Behavioral habits present the greatest threshold for a new model to replace an old one. This epidemic will be a catalyst for numerous new technologies and business models.

Third, China’s measures to actively expand domestic demand involve favorable policies. China has introduced many policies and measures to expand domestic demand, especially policies to promote resumption of work and production in the consumption sector and create an atmosphere in which consumers can consume without worries. China has also introduced a series of long-term policies and measures including tax cuts to further promote consumption and investment by expanding domestic demand.

Fourth, China’s further opening up will become a new driving force for economic growth. China has revised a series of institutional arrangements to further expand its opening up. In particular, access requirements for foreign investors have been adjusted, and more areas have been opened to foreign investment. Revision of the new negative list for foreign investment has started, and regulations on foreign investment will continue to loosen. China’s further opening up to the outside world will effectively advance global division of labor, improve the global industrial chain, and promote economic growth for China and the world.