China’s Economic Reopening in the Pandemic Era

by Commercial Section, Chinese Embassy in Manila

Foreword: At present, the improved situation of COVID-19 prevention and control in China has been further consolidated, as we have changed from the emergency respond mode to the normalized prevention and control mode, while accelerating restoration of normal daily life and actively promoting resumption of work and production. As the community quarantine measures are eased in many parts of the country as MECQ or MGCQ, the Philippines is facing new challenges in coordinating epidemic prevention and control with resuming work and production. Under this new normality, China is willing to share pragmatic and effective experience and practices in this regard with the Philippines so as to support the Filipinos overcome the epidemic and resume normal production and life as soon as possible.

At present, the COVID-19 is still spreading around the world. It will be some time before we can completely defeat the pandemic.

How to adapt to the new normal? How to balance the pandemic prevention and control with the economic and social development?

This is a new challenge.

China has worked very hard to bring the pandemic under control. Under the new normal of day-to-day prevention and control, China is now making all-out efforts towards economic reopening, which will greatly ease the pressure of global medical supplies’ shortage, effectively stabilize the international industrial chain and supply chain, and make positive contributions to the global anti-pandemic battle and economic stability.

In April, China ’s Manufacturing Purchasing Managers Index and Non-Manufacturing Business Activity Index were both above the 50-point mark. Up until April 25th, according to the survey of the national purchasing managers, the resumption rate of large and medium-sized enterprises was 98.5%. Among them, 99.7% of manufacturing enterprises had returned to work, 80% of which had worked with an 80% normal capacity.

There is no definite answer as to how to contain the pandemic as well as promote the resumption of work. Every nation and region needs to review the situation constantly and look for a fitting solution. China, as the first country in the world which has contained the pandemic and started to reopen its economy, has explored many ways and gained some useful experience. 

1. Take steady and orderly approach. The key to contain the pandemic and resume work at the same time is to keep a good balance. As President Xi Jinping noted, “we should remain committed to the underlying principle of making progress while keeping performance stable.

Stability is the key. We must ensure that the number of cases will not bounce back, and must take strict, solid, and precise measures to prevent the virus from being imported from overseas or spreading again in the local community. We should take active steps on a stable basis, and promote the overall resumption of work and production together with the normalized work of pandemic prevention and control.”

Therefore, the Chinese governments at all levels issued relevant guidelines and work notices, adopted orderly and differentiated approaches over various regions and sectors according to the severity of the pandemic, and asked the enterprises to reopen zone by zone, and group by group. In the low-risk regions, they asked all the enterprises to reopen and resume as soon as possible. In the middle-risk and high-risk regions, they required the enterprises to take steady steps to reopen on the basis of containing the pandemic, and launched special inspections to ensure that policies are effectively implemented.

Recently, over the management of transportation vehicles and stations, the Ministry of Transportation issued the third edition of the prevention and control guidelines based on the pandemic zoning, which focused on improving the disinfection and ventilation of the station and the vehicle, the setting of inspection areas on the vehicle, the protection of personnel, etc.

2. Intensify macro-policy management. China continues to step up the macroeconomic policy adjustments. In order to promote reproduction and help enterprises solve problems, various ministries around the country have precisely and timely launched 90 policies in 8 areas, including raising the local government’s special debt limit, reducing taxes and fees, providing special credits, expanding the scale of re-lengding and re-discounting, targeted requirement reserve ratio cuts，promoting consumption, and other fiscal, taxation, financial, social security measures to help the enterprises, especially the small and medium-sized enterprises, to reopen.

Since the beginning of this year, the taxes and fees have been further cut down by 318.2 billion yuan. The financial sector have provided 3.55 trillion yuan of low-cost funds to financial institutions through three times of RRR cuts, re-lending and re-discounting measures, which in turn benefited more than 2.5 million small and medium-sized enterprises.

In response to such problems as the shortage of labor in enterprises, the retention of migrant workers, and the difficulty in graduates obtaining jobs, the relevant ministries and local administrations have issued a number of policies and measures to reduce burden, stabilize jobs, and expand employment. Some actions include increasing employees’ guarantee and unemployment insurance, online recruiting, online training, and so forth. They strengthened the connection between supply and demand sides in the labor market, and injected a string of guarantee into the enterprises and the people.

Beijing launched “customized buses” to provide commuters with the customized public transportation. Shanghai launched “point-to-point” inter-provincial special vehicles to take the workers back to the construction site. Heilongjiang, Hebei, Qinghai and other places have implemented the “One code pass”, a code scan service invented by Tencent company, and facilitated the workers to travel across different regions. At present, the labor market continues to warm up. The labor force of manufacturing enterprises has increased for two consecutive months. More than 100 million migrant workers have returned to work.

3. Secure the industrial and supply chains. The Chinese government asked the large companies to help the small ones, the upstream business to coordinate with the downstream ones, the domestic enterprises to interact with the foreign ones. China focused on the key industrial chains, and guided the leading companies to improve the resumption of the entire industrial chain.

Some industries like automobiles and electronics share the feature of a long, highly refined, and deeply inter-dependent supply chain system, and have a positive influence over the manufacturing sectors. Some industries like the agricultural machinery are the basic industries. Some industries are relevant to the people’s livelihood, such as the agricultural and sideline food processing, etc. Some industries have a direct impact over the stability of the global supply chain, such as the active pharmaceutical ingredients industries. For those industries listed above, the Chinese government keeps on sorting out a list of leading enterprises and their core supporting enterprises, dynamically adjusts and promotes their resumption, helps them solve the practical problems and overcome difficulties, and finally pushes forward the effective execution of the whole industry chain.

Taking Jiangsu Province as an example, the relevant ministries pooled a list of 491 leading enterprises, and helped resume the work of more than 1,400 enterprises in the supply chain, through the coordination of ministries, provinces, cities and the Yangtze River Delta region.

Some foreign trade companies faced problems like cancellation or extension of orders, difficulties in signing new orders, poor logistics and transportation, etc. Therefore, the government launched policies to ensure the smooth operation of their supply chain, including the support for the China-Europe trains, the setting of the comprehensive free trade zones and so forth.

The supporting policies are equally applicable to domestic and foreign enterprises. The government continues to lower the threshold of the foreign investment and improve the business environment for the foreign companies. According to the survey of more than 8200 foreign companies in China, up until April 28th, 76.7% of them had resumed work with a 70% normal capacity. 

4. Encourage innovation and the development of new economy. China gives full play to its own advantages, cultivates the emergence of the new consumption types during the pandemic, and explores compatible institutional mechanism and policy environments for them. China also encourages the development of the new business models such as “Internet +”, which helps accelerate the speed of work resumption, and inject a new momentum into the economic and social development.

China has recently issued a plan to promote the digital service and foster the development of the new economy, for example, new forms of retail business, online shopping, contactless distribution, online medical service, online education, one-stop travel, shared employees, remote working, etc. On top of the existing 59 cross-border e-commerce pilot zones, China recently announced the establishment of 46 new ones, supporting and guiding enterprises to open up new businesses and new markets through online platforms and digital marketing.

Next, China will take pilot studies on the practices like mutual recognition and sharing of electronic medical cases, online training for vocational education, online diagnosis and treatment, and the application of online education. In the first 4 months this year, the online retail sales of physical goods in China have increased by 8.6%.

During the pandemic, there were an emergence of more than 11,000 new internet medical companies, and a total of more than 300 million users of remote workspace applications. Live streaming sales, online “Canton Fair”, and AI travel became new trends. China further promoted the construction of new infrastructure such as 5G networks, Internet of Things, big data, artificial intelligence, industrial Internet, and smart cities.

In the first 4 months this year, the added value of China’s high-tech manufacturing and equipment manufacturing has increased by 10.5% and 9.3% respectively. China used the emerging technologies such as drones and the Internet of Things to help accelerate the development of “smart agriculture”. For example, pig farms in Sihong, Jiangsu Province implemented “pig face recognition” and “infrared temperature measurement” techniques to record the characteristics, growth experience, and disease history of each pig, which helped to realize the digitalization of pig farming.

With various policies in place to help stabilize employment and promote production, the progress of resuming work and production has significantly accelerated, while the economic vitality has gradually been released. However, we are well aware that the global pandemic situation is still grim, and that the risk of a rebound or even a second wave could be coming in the future.

Therefore, an economic restart can never be achieved overnight. Different countries have different national conditions. Each has their own questions as to how to contain the pandemic and resume work. There is no one-size-fits-all answer. For a long period of time in the future, for countries around the world, they need to explore how to grasp the balance of pandemic prevention and control and economic development on their own. There is yet a long way to go.

The unprecedented challenges require unprecedented solidarity. China is willing to continuously and sincerely unite with the international community including the Philippines, help each other to safeguard the global public health security, and promote the prosperity and development of the world economy.

*This article represents the view of Chinese Embassy in Manila and not the official position of PIPVTR.

Photo Credit: Three predictions of China and world economies in post-COVID-19 era by CGTN.