Need to seek opportunities for growth outbreak offers

China’s GDP contracted by 6.8 percent year-on-year in the first quarter of this year because the novel coronavirus outbreak seriously disrupted economic activity, the National Bureau of Statistics said on Friday. Yet every crisis brings with itself opportunities.

To begin with, the epidemic has caused market adjustment and an industrial transformation. In recent years, the Chinese economy has faced the problem of excessive production capacity, which the supply side structural reform launched in 2015 is aimed at solving.

The outbreak has also disrupted the market and supply chain by forcing enterprises to optimize their business and operation models, while boosting online businesses and the cloud office. Some sectors such as video-teleconferencing, online education and medical services have developed rapidly, because of the stringent restrictions imposed by authorities on the movement of people and vehicles to prevent and control the spread of the virus. Also, the significance of manufacturing and hi-tech industries has drawn greater attention than before.

The epidemic has had a huge impact on the global supply chain. But since the Chinese economy is highly resilient, it is easier for it to recover compared with many other countries. Also, the impact of the epidemic on production in China is likely to be temporary, but the disruption in the global industrial chain will have a long-term and profound effect.

The spread of the virus across the world will result in a further concentration of global manufacturing industries and the industrial chain in China. And since China has largely controlled the spread of the virus at home, if the pandemic continues unabated in the rest of the world in the second and third quarters, the world’s reliance on China’s manufacturing industry may increase, bringing more orders for Chinese enterprises.

China, except Hubei province, has gradually resumed economic operations, especially production of goods, since late March, and Hubei is expected to return to normal by the end of April.

And the repressed consumer demand will gradually release in the coming months, as Chinese people’s consumption will likely increase at a fast pace after the epidemic. So the outbreak is not expected to have a devastating impact on China’s domestic demand in the rest of 2020.

In addition, the travel bans imposed by many countries due to the epidemic have suppressed the Chinese people’s demand for foreign travel for leisure and business, which will help the country reduce its service trade deficit.

The government and market both are important drivers of a country’s development. China has launched widespread governmental reform to keep pace with the country’s rapid social and economic development, but some inland province’s governance capacity and efficiency still lag behind that of coastal provinces.

Although the outbreak has exposed many problems, it has also deepened mutual understanding and cooperation among governments at various levels and enterprises. Governments and enterprises are indispensable for each other, and both sides need self-improvement to cope with the negative effects of the epidemic.

Therefore, for its long-term economic and social development, China needs to improve the efficiency of both the market and the governments.

The pandemic has caused huge losses to society, but it has also created opportunities for change. The enterprises should reflect on their problems exposed by the epidemic, and seize the opportunities for further development, which will benefit not only the enterprises but also the entire country.

The author is a researcher at the Chinese Academy of International Trade and Economic Cooperation. The views don’t necessarily reflect those of China Daily.