Macroeconomics examines economy-wide phenomenasuch as inflation, price levels, economic growth rates, national income, gross domestic productGDP, and changes in unemployment rates.The CO
Introduction
Macroeconomics is a branch of economics that studies how an overall economy works - markets, businesses, consumers, and governments Macroeconomics examines economy-wide phenomena such as inflation, price levels, economic growth rates, national income, gross domestic product (GDP), and changes in unemployment rates.
The COVID-19 pandemic has had a profound impact on the Chinese economy, leading to a slowdown in GDP growth to 2.2% in 2020, the lowest in over four decades To counter this economic downturn, the Chinese government has implemented a range of initiatives, including fiscal stimulus to boost spending, monetary easing to lower interest rates and stimulate investment, and strategic infrastructure investments to enhance long-term economic growth These comprehensive measures aim to revitalize the economy and mitigate the economic consequences of the pandemic.
Macroeconomics
GDP
A nation's current gross domestic product is a crucial metric for assessing the state of its economy It talks about the annual total market value of all products and services generated in a nation To guarantee consistency, the current GDP is adjusted for inflation before being compared to previous years Since real GDP growth takes into account continuous GDP numbers, it is considered a crucial indication of economic growth With a GDP of almost 25.5 trillion dollars as of 2022, China was among the top nations in the world with the greatest gross domestic products, second only to the United States (C Textor, 2023)
In the first half of 2023, China's GDP surged by 5.5%, marking a 1% increase over the first quarter This growth was fueled by a 6.3% increase in Q2, despite a more modest 0.8% rise compared to Q1 The NBS attributed this growth to China's effective macroeconomic policies and strong industrial performance.
Dissecting industrial segments, we find that services have recovered the fastest when compared to 2022: The agricultural production situation is stable, industrial production is on the recovery path In the first half of this year, the added value of the agricultural sector (cultivation) increased by 3.3% over the same period last year The service industry grew rapidly, 6.4% over the same period last year, more than 1 percentage point compared to the first quarter (qdnd, 2023)
Inflation and Deflation
Traditionally, national inflation rates are calculated using the country's Consumer Price Index (CPI) The Consumer Price Index (CPI), a type of economic indicator, is used to monitor changes over time in the cost of a representative sample of consumer goods and services for a certain population and geographic region (Statista, 2023)
According toZhiwei Zhang, chief economist at Pinpoint Asset Management,even with a 0% CPI inflation rate, the Chinese economy remains vulnerable to deflationary pressure The revival of domestic demand is not particularly important in the absence of substantial government aid. Household demand is still being hampered by the fall in consumer confidence in the real estate market.
The slow reduction in the average level of prices for goods and services within an economy is known as deflation China's CPI decreased by 0.3% in July 2023 compared to the same month the previous year, marking the first such decline since February 2021 For the last ten months,the PPI in China has been declining.
Unemployment
China's urban unemployment rate dropped from 5.2% in August 2023 to 5.0% in September
According to a recent survey, the unemployment rate in September 2023 reached a low of 4.7%, the lowest since November 2021 This decline was observed across all household types, with registered local households reporting a 5.1% unemployment rate, non-local households at 4.9%, and non-local agricultural households at 4.7% The survey also revealed a slight decrease in the unemployment rate in 31 major cities and towns, dropping from 5.3% in August to 5.2% in September Furthermore, employees nationwide worked an average of 48.7 to 48.8 hours per week.
Furthermore, there were 187.74 million more rural migrant laborers overall at that time—2.8% more than the year before The unemployment rate was 5.3% throughout the first three quarters of the year The administration intends to keep the unemployment rate at 5.5% while adding 12 million new urban jobs by 2023 (TRADING ECONOMICS, 2023)
Fiscal and Monetary Policy
Tax rebates and fee cuts:The Chinese government has implemented a series of tax relief measures for small businesses and individuals impacted by the pandemic These measures include reductions and waivers on corporate income tax, value-added tax, and individual income tax The relief measures have been extended to a range of industries, including manufacturing, services, technology, and low-profit enterprises In March 2022, China issued US$39 billion in tax deferrals to small businesses The government has pledged a total of RMB 2.5 trillion (US$374 billion) in tax refunds and reductions in 2022, with RMB 1.5 trillion (US$224.5 billion) earmarked for VAT rebates Additionally, the government has extended fee cuts for small businesses, including deferral of social security premiums, housing provident fund payments, loan interest, and reduction of education surcharges (Briefing, 2022)
Special purposed bond:Local governments in China use special-purpose bonds (SPBs) to fund infrastructure and public projects These bonds are limited to nine major areas including transportation, energy, and affordable housing In 2021, the Chinese government set the SPB quota at RMB 3.65 trillion (US$547.5 billion), with around 50% of the funds being used for transportation and infrastructure projects The government front-loaded the 2022 quota of SPBs,releasing RMB 1.46 trillion (US$218.5 billion) in late December 2021 to boost spending at the start of the year Local governments have been urged to complete the issuance of all SPBs released by the end of June and mostly use them up by the end of August, with a total quota ofRMB 3.65 trillion (US$547.5 billion) set for 2022 (Briefing, 2022)
(Times, no date) b) Monetary Policies
PBOC profit transfer:The People's Bank of China (PBOC) announced in March 2022 a profit transfer of RMB 1 trillion (US$149.6 billion) to the government The funds are intended to be primarily used for tax refunds and transfers to local governments to provide support for local businesses and individuals (Briefing, 2022)
Reserve Requirement Ratio (RRR) cuts:
The People's Bank of China (PBOC) has been using cutting banks' reserve requirement ratio (RRR) as one of the tools of monetary policy By lowering the RRR, banks have more cash to spend, which can be used to provide loans to businesses in need In December 2021, the PBOC cut the RRR by 0.5 percent, freeing up RMB 1.2 trillion (US$179.6 billion) for banks In April
2022, the first RRR cut of the year occurred, but it was smaller than previous cuts at 0.25 percent,freeing up RMB 530 billion (US$79.3 billion) (Briefing, 2022)
(Reserve requirement ratio cut in China – will it resuscitate the economy?, 2023)
Loan Prime Rate (LPR) cuts:
The Loan Prime Rate (LPR), determined by the People's Bank of China (PBOC), serves as a crucial monetary policy instrument By adjusting the LPR, the PBOC influences commercial banks' benchmark corporate loan and mortgage rates Lowering the LPR reduces borrowing costs, increasing the availability of financial resources within the economy This strategy stimulates economic growth by enhancing access to affordable financing for businesses and individuals Notably, in May 2022, the PBOC implemented a significant LPR reduction, primarily to bolster the real estate sector by making new mortgages more accessible.
(China cuts the 5-year loan prime rate to boost credit, no date)
Exchange rates
China maintained a managed exchange rate system, where the People's Bank of China (PBOC) tightly controlled the yuan's value against a basket of currencies This system aimed to stabilize the exchange rate and promote economic stability Before COVID-19, the yuan had been appreciating gradually against the U.S dollar and other major currencies over several years This was partly due to China's economic growth and efforts to internationalize the yuan.
The COVID-19 pandemic significantly disrupted global financial markets, leading to increased volatility in exchange rates worldwide.
In early 2020, as the pandemic spread globally, many currencies, including the yuan, initially weakened against the U.S dollar due to investor concerns and economic uncertainties China took measures to stabilize its economy, including fiscal and monetary policy adjustments, which influenced the exchange rate's movements.
As China's economy began to recover from the initial shock of the pandemic, the yuan gradually regained strength This recovery was due to China's relative success in managing the pandemic and a resurgence of economic growth The yuan continued to appreciate against the U.S dollar and other major currencies, reflecting China's economic resilience and a renewed focus on internationalization.
Exchange rate between the Chinese yuan (CNY) and the U.S dollar (USD):
January 2019: Approximately 6.72 CNY to 1 USD.
December 2019: Approximately 6.97 CNY to 1 USD.
March 2020 (Initial impact of COVID-19): Approximately 7.08 CNY to 1 USD.
June 2020 (Some recovery): Approximately 7.07 CNY to 1 USD.
December 2020: Approximately 6.53 CNY to 1 USD.
March 2021: Approximately 6.47 CNY to 1 USD.
October 2021: Approximately 6.45 CNY to 1 USD.
Economic Growth
According to CGTN, the Chinese economy grew from 54,000 billion yuan (about 7,390 billion USD) in 2012 to 114,000 billion yuan (about 15,600 billion USD) in 2021, with accuracy in the world economy proportion increased from 11.3% to 18.5%.
Also, between 2012 and 2021, China's GDP per capita increased from 6,300 USD to more than12,000 USD, surpassing the world's GDP per capita.
As the world's leading product power, the added value of China's manufacturing sector increased from 17,000 billion yuan (about 2,300 billion USD) to 31,400 billion yuan (about 4,300 billion USD) - an increase from 22,000 billion yuan (about 2,300 billion USD) 5% increased nearly 30% of the world's total production value.
From 2017 to 2021, China maintained its position as the world's leading commercialized country for five consecutive years
Business Cycles
After the outbreak of COVID-19 in December 2019, the normal economic growth of 6% suddenly dropped to 2.2% in 2020 The unprecedented pandemic hindered consumer demand, production, investment, and international trade In 2021 growth bounced back to 8.4% from a relatively very low base in 2020
Economic Expansion: China was in a phase of sustained economic growth for several years leading up to 2020 The country's annual GDP growth rate was around 6% to 7%, and industrial production was steadily increasing.
Peak: China's economy showed signs of slowing down in the years just before 2020, but it was still considered relatively strong The trade war with the United States had impacted exports to some extent.
Contraction: There were no major contractions in the years leading up to 2020 The Chinese government implemented various measures to support the economy and maintain stability. During COVID-19 (2020):
As a consequence of the COVID-19 pandemic, China's economy experienced a significant contraction in the first quarter of 2020 Business closures and a notable decline in industrial production contributed to this downturn The economic fallout was evident in a 6.8% contraction of China's GDP during that period.
Trough: The economy started to recover in the second quarter of 2020, with lockdowns easing and production resuming The Chinese government introduced stimulus measures to boost economic recovery.
Recovery: China experienced a robust economic recovery in the latter half of 2020 and continued to do so in 2021 China's economy quickly rebounded to pre-pandemic levels, with strong GDP growth rates.
Economic Expansion: In 2021, China's GDP growth was around 8.1%, which is significantly higher compared to most other major economies Industrial production and exports rebounded strongly.
Peak: China entered a period of strong economic performance, with growth rates that were among the highest in the world.
Government Debt
China’s debt ratio has risen to a new high, reversing last year’s deleveraging efforts The non- financial sector debt-to-GDP ratio, including external debt, increased by 10.4 percentage points from end-2021 to 289 percent of GDP by the third quarter in 2022 Weaker economic growth, combined with higher borrowing to finance fiscal stimulus, pushed up the domestic non-financial debt ratio Meanwhile, external debt remained low at 12.4 percent of GDP, up only by 0.3 percentage points from 2021.
Subnational government debt has surged in China, driven by a surge in local government debt (2.2 percentage points to 28.8% of GDP) due to infrastructure spending and land revenue shortfalls Local government financing vehicles (LGFVs) have also contributed to this increase, with their debt rising to an estimated 48.5% of GDP In contrast, central government debt has remained relatively stable at 20.6% of GDP.
Government Policies
The Chinese government has implemented monetary and fiscal measures to counter the recent slowdown in the country's economic growth Despite a peak in GDP growth in Q1 of 2021, regulatory tightening measures and a push for "common prosperity" have led to a downward trend in the economy The 2022 growth outlook is expected to face several challenges, including normalization of export growth, increased default risk among real estate companies, crackdowns on the housing sector, and a "zero tolerance" approach to COVID-19 that has negatively impacted consumption and local government fiscal balance As a result, growth slowed to 4% in Q4 2021 from 4.9% y/y in Q3 and is projected to further decline to 5.2% in 2022 from 8.1% in
China's government shifted from a tightening to a loosening policy stance in 2021 due to an economic slowdown While multiple policy tools are available, proactive fiscal policy may be more effective than monetary easing in 2022 This is because fiscal policy can directly impact aggregate demand and address supply-side challenges, while monetary policy may have limited effectiveness in the current economic environment.
Firstly, China's monetary easing capacity is limited as the US Federal Reserve has already begun
QE Tapering, and interest rate hikes and central bank balance sheet reductions are expected soon.
To avoid large-scale capital outflows and significant RMB exchange rate depreciation, unsynchronized and independent easing monetary policies are likely to be halted after the US interest rate hike begins in March.(Dong and Xia, 2022)
Secondly, the monetary policy transmission mechanism is not operating smoothly in China.Despite recent cuts to RRR and LPR by the central bank, commercial banks are still hesitant to
In 2020, China exported $208B worth of services The top services exported by China in 2020 were Other business services ($69.8B), Transportation ($56.7B), Computer and information services ($39B), Construction services ($12.6B), and Travel ($9.95B). b) Imports
China is also a major importer of goods, including raw materials, energy, and components for its manufacturing sector In 2022, China's imports totaled $2.71 trillion, accounting for 11.5% of global imports.
The pandemic has also disrupted global supply chains, making it more difficult and expensive for China to import goods This has had a negative impact on China's manufacturing sector and has contributed to rising inflation.
The top services imported by China in 2020 were Travel ($131B), Transportation ($94.7B),Other business services ($50.3B), Royalties and license fees ($37.9B), and Computer and information services ($32.6B). c) Macroeconomic impact
China's dependency on international markets has made its economy more vulnerable to external shocks, such as the COVID-19 pandemic The pandemic has caused a slowdown in China's economic growth and has led to increased unemployment.
To reduce dependency on external markets, China has implemented strategies such as promoting domestic consumption and investing heavily in advanced technology industries Despite these efforts, China's reliance on international markets is expected to persist in the near future.
IV- The Chinese government’s policies deal with the effects caused by the Covid-19 pandemic
Facing the risk of global economic recession due to the Covid-19 pandemic, many countries around the world have launched a series of "huge" economic stimulus packages to prevent decline and promote economic growth The economy returned, creating more jobs and restarting social activities To address production disruptions, the government has encouraged the resumption of production and provided financial support to struggling industries China's economic stimulus package worth 4,000 billion yuan (equivalent to 559 billion USD) will cover costs for factories, businesses and traders that are operating and facing difficulties due to the impact of the pandemic Covid-19 (Thanh Tran, 2020)
This helps stabilize production, prevent large-scale layoffs and partly minimize the negative impact on exports Based on the chart, the average growth rate in the period 1979-2019 reached 9.53%/year, the growth target of 5% this year seems very modest compared to the previous period as well as compared to the current level and low growth in 2022.
The COVID-19 pandemic has had a profound impact on India's economy The shutdown of businesses and other economic activities has led to a sharp decline in GDP Moreover, the pandemic has also taken a toll on the tourism industry Due to the contagious nature of the virus, travel restrictions and health concerns have caused a significant decrease in tourism revenue.
Based on the chart, we can clearly determine that Chinese tourism from 2014-2019 was quite stable But from 2019 to 2022, Chinese tourism has clearly declined from 11.6% in 2019 to 4.5% in 2020, and three years later this number has had no change or growth significantly until 2023 (Statista, 2023) This shows that Chinese tourism needs some time to recover after the epidemic. The government introduced policies to boost domestic tourism, including subsidies and incentives for travel within China.
With government action, while international tourism remained low, domestic tourism experienced a revival, providing some relief to the tourism and service sectors This may show that the Chinese Government has managed the epidemic situation quite effectively and promoted the recovery of the domestic tourism industry.
3 Healthcare and Medical Supplies Production
The appearance of the first case of infection was recorded at the end of 2019 in the city of Wuhan, China Immediately after identifying the first case of Covid-19 infection, the Chinese Ministry of Health applied quarantine and control measures to prevent the spread of the disease. However, the epidemic quickly spread and within a short period of time, the number of infected people increased significantly (Wanyuan Song, 2022).
China has allocated significant financial resources to combat the COVID-19 pandemic, investing over 27.95 billion yuan (USD 3.71 billion) as of February 14, 2020 The country's commitment to vaccine production is evident in the establishment of a first-of-its-kind mRNA vaccine manufacturing facility with an annual capacity of 200 million doses These initiatives have played a crucial role in controlling the pandemic, safeguarding public health, and fostering economic recovery (Khanh Minh, 2021)
This not only addressed domestic shortages but also positioned China as a significant global supplier of medical goods According to Airfinity, from November 2020 to September 2021, China exported 1% of Covid-19 vaccines to 109 countries and territories with a total population of about 3 billion people, of which about 50 million donate attribute (Hoai Thu, 2021).
Supporting neighboring countries in accessing vaccine supplies not only helps control the epidemic and quickly restore the economy affected by the pandemic, but also creates opportunities for China to expand many types of vaccines future business performance and economic recovery after the COVID-19 pandemic.
Due to the impact of the epidemic, the number of unemployed people in China from 2019-2020 increased dramatically.
How the Covid-19 pandemic affects the country's economy
Dependency on International Markets
Facing the COVID-19-induced recession risk, numerous countries have deployed substantial economic stimulus packages to mitigate decline and foster growth Governments have prioritized production resumption and provided financial aid to struggling industries For instance, China's stimulus package of 4,000 billion yuan ($559 billion) aims to support businesses and industries impacted by the pandemic, driving economic recovery, job creation, and social activity resumption.
This helps stabilize production, prevent large-scale layoffs and partly minimize the negative impact on exports Based on the chart, the average growth rate in the period 1979-2019 reached 9.53%/year, the growth target of 5% this year seems very modest compared to the previous period as well as compared to the current level and low growth in 2022.
The Chinese government’s policies deal with the effects caused by the Covid-19 pandemic
Stimulus policy
Facing the risk of global economic recession due to the Covid-19 pandemic, many countries around the world have launched a series of "huge" economic stimulus packages to prevent decline and promote economic growth The economy returned, creating more jobs and restarting social activities To address production disruptions, the government has encouraged the resumption of production and provided financial support to struggling industries China's economic stimulus package worth 4,000 billion yuan (equivalent to 559 billion USD) will cover costs for factories, businesses and traders that are operating and facing difficulties due to the impact of the pandemic Covid-19 (Thanh Tran, 2020)
This helps stabilize production, prevent large-scale layoffs and partly minimize the negative impact on exports Based on the chart, the average growth rate in the period 1979-2019 reached 9.53%/year, the growth target of 5% this year seems very modest compared to the previous period as well as compared to the current level and low growth in 2022.
The Covid-19 epidemic not only has a negative impact on the fundamental economy of the country of billions of people, but also causes tourism activities to stagnate due to the contagious nature of the epidemic.
Based on the chart, we can clearly determine that Chinese tourism from 2014-2019 was quite stable But from 2019 to 2022, Chinese tourism has clearly declined from 11.6% in 2019 to 4.5% in 2020, and three years later this number has had no change or growth significantly until 2023 (Statista, 2023) This shows that Chinese tourism needs some time to recover after the epidemic. The government introduced policies to boost domestic tourism, including subsidies and incentives for travel within China.
With government action, while international tourism remained low, domestic tourism experienced a revival, providing some relief to the tourism and service sectors This may show that the Chinese Government has managed the epidemic situation quite effectively and promoted the recovery of the domestic tourism industry.
3 Healthcare and Medical Supplies Production
The appearance of the first case of infection was recorded at the end of 2019 in the city of Wuhan, China Immediately after identifying the first case of Covid-19 infection, the Chinese Ministry of Health applied quarantine and control measures to prevent the spread of the disease. However, the epidemic quickly spread and within a short period of time, the number of infected people increased significantly (Wanyuan Song, 2022).
To combat the COVID-19 pandemic, China has allocated over 27.95 billion yuan (3.71 billion USD) to the healthcare system as of February 14, 2020 Demonstrating their commitment to public health, China has also established a COVID-19 mRNA Vaccine Production Base with a production capacity of 200 million doses annually, representing an investment of 520 million yuan (77 million USD) These measures reflect China's effective response to the pandemic, facilitating positive outcomes for both public health protection and the country's economic recovery (Khanh Minh, 2021).
This not only addressed domestic shortages but also positioned China as a significant global supplier of medical goods According to Airfinity, from November 2020 to September 2021, China exported 1% of Covid-19 vaccines to 109 countries and territories with a total population of about 3 billion people, of which about 50 million donate attribute (Hoai Thu, 2021).
By supporting access to vaccines in neighboring countries, China not only contributes to epidemic control and the swift economic recovery of those nations but also fosters opportunities for future business success and its own economic resurgence post-pandemic This vaccine assistance serves as a catalyst for expanding China's vaccine portfolio and securing future revenue streams, thus strengthening its position as a key player in global healthcare.
Due to the impact of the epidemic, the number of unemployed people in China from 2019-2020 increased dramatically.
Because the Government has implemented measures to subsidize wages for businesses to keep workers employed, based on the data table above, it can be seen that only from the end of 2019 to the beginning of 2020 (the start of the epidemic disease), China recorded an increase in the unemployment rate in the country's urban areas to a record 6.2% in urban areas February and decreased slightly to 5.9% in March (Chanh Tai, 2020) After controlling the epidemic, the Chinese Government has had supportive policies to help people escape the economic crisis as well as the storm of job loss due to the severe impact of the epidemic.
While job losses occurred, these policies helped reduce the scale of unemployment and supported workers' incomes The Chinese government is especially interested in creating jobs for workers during the epidemic, because if jobs can be maintained and consumer price increases are slowed down, workers' lives will be less difficult than In the first half of 2020, China created 5.6 million new jobs for urban workers, reaching nearly 63% of the yearly plan The urban unemployment rate decreased from a peak of 6.2% to 5.7% (Thai Binh, 2020).
5 Debt Management and Financial Stability
After the covid-19 epidemic, millions of Chinese people defaulted on their credit loans, mainly due to the impact of the epidemic, the number of unemployed people increased In China, the number of credit cards with overdue credit card debt in February jumped 50% compared to the same period last year, according to a Bloomberg source Qudian, an online lending company headquartered in Beijing, also said the overdue debt rate increased from 13% in December 2019 to 20% in February 2020 (Thuy Dung, 2020).
The Chinese government is trying to inject liquidity and loosen monetary policy to support the economy's recovery to reduce unemployment and ease the economic impact of the pandemic. The policies helped stabilize the economy but raised concerns about fiscal sustainability and financial stability in the long run According to the Institute of International Finance IIF, the debt-to-income ratio of Chinese consumers has increased from 30% a decade ago to 92% at the end of 2018, surpassing Germany and equivalent to the US and Japan With the risk of a prolonged economic recession, many consumers will certainly face the risk of default (Thuy Dung, 2020) From there, it can be clearly seen how the Covid-19 epidemic has had a severe impact on the country of billions of people.
Amidst the escalating pandemic, China's proactive response has alleviated the strain on healthcare facilities The government's rapid construction of a 1,500-room field hospital in just five days underscores its commitment to combating the virus's resurgence Moreover, China's development of a COVID-19 vaccine within four years, significantly faster than the typical 10-15 year timeframe, demonstrates its dedication to public health and the swift deployment of medical advancements.
China's healthcare capacity has been enhanced through measures that have contributed to the successful development and distribution of COVID-19 vaccines Despite a shorter history in vaccine expertise than the US and Europe, China has emerged as a global leader in this field As the largest producer and consumer of vaccines worldwide, China possesses the capacity to produce a significant amount of vaccines thanks to its robust manufacturing capabilities.
Healthcare and Medical Supplies Production
The appearance of the first case of infection was recorded at the end of 2019 in the city of Wuhan, China Immediately after identifying the first case of Covid-19 infection, the Chinese Ministry of Health applied quarantine and control measures to prevent the spread of the disease. However, the epidemic quickly spread and within a short period of time, the number of infected people increased significantly (Wanyuan Song, 2022).
According to some data, as of February 14, 2020, this country of billions of people has spent more than 27.95 billion yuan (3.71 billion USD) on the health sector to fight the epidemic. Furthermore, China's first Covid-19 mRNA Vaccine Production Base with an investment of 520 million yuan (equivalent to 77 million USD) is capable of producing 200 million doses per year. (Khanh Minh, 2021) The Chinese government has demonstrated excellent capabilities in controlling and dealing with the COVID-19 pandemic, while creating positive impacts for public health and national economic recovery.
China's proactive export of medical goods during the pandemic not only alleviated domestic shortages, but also established China as a major global supplier in this sector From November 2020 to September 2021, China exported 1% of COVID-19 vaccines to 109 countries and territories, reaching a population of approximately 3 billion people, with approximately 50 million doses being donated, highlighting China's significant role in the global fight against the pandemic.
Supporting neighboring countries in accessing vaccine supplies not only helps control the epidemic and quickly restore the economy affected by the pandemic, but also creates opportunities for China to expand many types of vaccines future business performance and economic recovery after the COVID-19 pandemic.
Employment Support
Due to the impact of the epidemic, the number of unemployed people in China from 2019-2020 increased dramatically.
Because the Government has implemented measures to subsidize wages for businesses to keep workers employed, based on the data table above, it can be seen that only from the end of 2019 to the beginning of 2020 (the start of the epidemic disease), China recorded an increase in the unemployment rate in the country's urban areas to a record 6.2% in urban areas February and decreased slightly to 5.9% in March (Chanh Tai, 2020) After controlling the epidemic, the Chinese Government has had supportive policies to help people escape the economic crisis as well as the storm of job loss due to the severe impact of the epidemic.
While job losses occurred, these policies helped reduce the scale of unemployment and supported workers' incomes The Chinese government is especially interested in creating jobs for workers during the epidemic, because if jobs can be maintained and consumer price increases are slowed down, workers' lives will be less difficult than In the first half of 2020, China created 5.6 million new jobs for urban workers, reaching nearly 63% of the yearly plan The urban unemployment rate decreased from a peak of 6.2% to 5.7% (Thai Binh, 2020).
Debt Management and Financial Stability
After the covid-19 epidemic, millions of Chinese people defaulted on their credit loans, mainly due to the impact of the epidemic, the number of unemployed people increased In China, the number of credit cards with overdue credit card debt in February jumped 50% compared to the same period last year, according to a Bloomberg source Qudian, an online lending company headquartered in Beijing, also said the overdue debt rate increased from 13% in December 2019 to 20% in February 2020 (Thuy Dung, 2020).
The Chinese government is trying to inject liquidity and loosen monetary policy to support the economy's recovery to reduce unemployment and ease the economic impact of the pandemic.The policies helped stabilize the economy but raised concerns about fiscal sustainability and financial stability in the long run According to the Institute of International Finance IIF, the debt-to-income ratio of Chinese consumers has increased from 30% a decade ago to 92% at the end of 2018, surpassing Germany and equivalent to the US and Japan With the risk of a prolonged economic recession, many consumers will certainly face the risk of default (ThuyDung, 2020) From there, it can be clearly seen how the Covid-19 epidemic has had a severe impact on the country of billions of people.
Healthcare Infrastructure Investment
The epidemic is spreading more and more, leading to overload in many hospitals and areas.However, the Chinese government reacted quickly to deal with this spread A clear example is the construction of a field campaign with a total of 1,500 rooms in just 5 days This is in response to the return of the COVID-19 pandemic (Hoa Vu, 2021) 4 years, according to CNN, is the fastest time to develop a vaccine ever Meanwhile, most commonly it takes 10 to 15 years (Siddhartha, 2020) It is clear that the Chinese government cares about people's health and invests specifically in creating vaccines.
These measures enhance the country's healthcare capacity and contribute to the successful development and distribution of COVID-19 vaccines Although China has had a shorter history of vaccine expertise than the US and Europe, it has produced products horizontally The country is currently the largest producer and consumer of vaccines worldwide According to the report on large human vaccine production during 2018-2022, China has the capacity to produce more than
1 billion vaccines annually from 40 manufacturers across the country President Xi Jinping theWorld Health Assembly, the WHO's decision-making body, in May that Beijing will help supply the vaccine globally, but only after it was deployed in China (Tat Dat, told 2020).
Domestic Consumption Promotion
Because of the impact of the Covid-19 pandemic, import and export activities in China are made of woodblocks Therefore, the Chinese Government has adopted measures to stimulate domestic consumption to provide economic growth The Covid-19 pandemic not only makes people's daily lives difficult but also disrupts economic and production activities The Chinese government has introduced flexible and appropriate policies for each stage to promote business development and encourage domestic consumption China is trying to boost domestic demand through stimulus packages, aiming to reduce dependence on the international market.
While the global demand situation remains an important point, encouraging domestic consumption is being considered as an important strategy to counteract the negative impact of the decline in demand International These solutions and policies, known as tools, are being applied to face the microeconomic challenges that the Covid-19 pandemic has posed in China.
(C Textor, 2023)From the chart, we can see that under the sudden impact of the COVID-19 pandemic, China'sGDP experienced a sudden decline from the end of 2019 to the beginning of 2020 However, it quickly surprisingly quickly recovered after the Chinese government applied measures to stimulate consumption in the national domestic product market.
Conclusion
China's economy has faced challenges during the COVID-19 pandemic, prompting the Chinese government to introduce economic stimulus packages and assistance programs Despite the economy's resilience and recovery, obstacles and long-term effects remain The government must balance pandemic response and economic growth, ensuring stability and sustainable development.