Synchronize actions to soften the blow
With the novel coronavirus pandemic wreaking havoc around the world, its impact on the global economy has been catastrophic. According to the International Monetary Fund, the world economy will contract by 3 percent this year, the “worst recession” since the Great Depression in the 1930s.
Moreover, “much worse growth outcomes are possible and maybe even likely,” the IMF said in its 2020 World Economic Outlook report on Tuesday, adding that the downturn will slash around $9 trillion from the world economy over 2020 and 2021, more than the economies of Japan and Germany combined.
To counter the unprecedented economic challenge posed by this global crisis, countries have no choice but to coordinate their macro policies and work together to repair and revive the disrupted global production and supply chains. “Substantial targeted fiscal, monetary and financial measures” can soften the blow, as the IMF said.
China, with a predicted growth of 1.2 percent and a major engine driving global growth — it contributed nearly 30 percent to global economic growth in 2019 — has a unique role to play to assuage the pains caused by a worldwide economic recession, especially given that it is one of the two leading economies that the IMF forecast are likely to avoid a recession this year; the other being India.
The government has made it a top priority to get the hard-hit economy back on its feet since it basically contained the spread of the virus within the country — by advancing reform and opening-up, widening market access, improving the business environment for foreign investors and reinvigorating trade through cutting tariffs and removing barriers. A new version of the negative list on foreign investment is expected to be released in May to expand the catalogue of industries where foreign investment is encouraged.
A recovery of the Chinese economy will help stabilize the global economy and aid the global fight against the virus, as evidenced in its resumed production of medical supplies and equipment that are being exported to many countries. As countries are economically interdependent as never before, they must join hands to tackle economic woes with synchronized actions. Any attempt to erect more trade barriers or seek an end to globalization in the post-pandemic era — as reflected in some calling for weaning off reliance on Chinese manufacturing in the global supply chain — will cause irreversible damage to future recovery and growth.
In a speech she delivered last week, IMF Managing Director Kristalina Georgieva quoted a line from Victor Hugo — “Great perils have this beauty, that they bring to light the fraternity of strangers.” World leaders should heed her call for solidarity, shelve their narrow-mindedness and dedicate themselves to concerted efforts to bring economic activities back on track — because confronted with this common enemy of humankind, all countries are in the same boat.