The global outbreak of the COVID-19 is a severe blow to the affected countries including China and the US. The China-US communication and how the two countries economically respond to the pandemic not only influence the economic trends of the two sides but will produce a profound impact on global economy.
Against such a backdrop, based on the previous China-US Track II Economic Dialogues, the National School of Development at Peking University (NSD) and the National Committee on US-China Relations (NCUSCR) launched their first online panel discussion on the night of April 29.
The dialogue, presided over by the President of NCUSCR Mr. Steve Orlins, focused on the short-term, medium-term and long-term impacts of COVID-19 on China-US economy. China and the US respectively invited two experts to join the panel discussion. Professor Huang Yiping, Deputy Dean of NSD, and Dr. Gao Shanwen, Chief Economist of Essence Securities, were selected as the Chinese representatives. The representatives from the US side were Dr. Catherine Mann, Citi’s Global Chief Economist, and Dr. Mark M. Zandi, Chief Economist of Moody’s Analytics. Hundreds of people from economic, business, and press circles participated in the online dialogue and raised questions to interact with the guest speakers.
During the dialogue, Dr. Gao Shanwen said that the pandemic would bring about negative consequences to China’s economic growth in the first quarter. The negative impacts of the epidemic on China’s first-quarter GDP growth rate were as much as four times higher than that of the 2008 global financial crisis. As for the total industrial output, the figure was twice than that of 2008. However, China’s overall prices and inflation during this period have been controlled within a limited range, which meant that the epidemic had not only affected the supply side, but also caused a significant impact on the demand side. We even saw a dramatic drop in sales of many commodities sold online, further indicating that the impacts of the epidemic on the economy would linger on. The government is expected to carry out economic stimulus plan to boost market demand, especially helping small and micro enterprises in service industry walk out of the shadow of the COVID-19.
Professor Huang Yiping pointed out that in the short term, the economic stimulus policy should focus more on supporting average households and small and micro enterprises, in a bid to help them reduce operating costs and restore economic vitality as soon as possible in the post-epidemic period. In the medium term, this round of economic recovery will be slow, and the hopes for a quick economic bounce back from the coronavirus, just like what happened after the end of the 2003 SARS epidemic, are looking bleaker. But in the next one or two years, the global retail industry may usher in new opportunities, and the prospects of China’s retail industry and digital economy is encouraging. In the long run, the international environment will become more complex, and the radical expansionary monetary policies pursued by central banks of various countries may continue over a period of time.
Dr. Catherine Mann held that the world is facing its worst economic crisis since the Great Depression. Severity of the recession caused by the pandemic will exceed expectation in terms of the depth and diffusion. At present, the GDP growth rate of major economies in the world has generally bottomed out. What is the trajectory of economic recovery in the future? According to Dr. Mann, the recovery of the manufacturing sector will show a “V”-shaped curve, while the service industry will represent a L-shaped recovery. This is not only because people will spend less due to health reasons, but also because relevant departments may introduce stricter social distancing policies. In addition, global investment will further decline sharply. Although many governments have introduced economic stimulus policies, these policies may not be sustainable given that the epidemic may continue longer than expected.
Dr. Mark M. Zandi said that the US GDP slumped over 4% in the first quarter and the unemployment rate is expected to reach 15%-20%. He predicted that the economic downturn caused by the pandemic has peaked in April. By July 4, most US companies will resume work, but this round of recovery will be limited and the recovery speed will be slower. For the whole world, what is more frustrated is that we cannot find a country to lead the post-pandemic recovery. Besides, although the stimulus measures taken by the US authorities are very necessary, the public debt held by the US government is another hidden danger. What’s more, the epidemic may impede the globalization and further produce negative impacts on the global economic recovery.
After the speeches, moderated by Mr. Steve Orlins, the four guest speakers answered and discussed the questions raised by the online audience in terms of the US government debt in the post-epidemic era, how to help small and micro enterprises survive the recession of the epidemic stage, and the risks of debt default facing emerging countries.
At midnight (Beijing time), the two-hour online panel discussion ended, starting a brand-new chapter for the China-US Track II Economic Dialogue.
About the China-US Track II Economic Dialogue
The China-US Track II Economic Dialogue was initiated in January 2010, and this bi-annual event is alternately held in New York in January and in Beijing in July. Through academic researches and exchanges conducted by the economists and scholars from China and the US, the event aims to help the governments, think tanks and the public from the two sides enhance mutual understanding and trust, as well as explore ways to strengthen win-win cooperation. The outcomes of the dialogue will be reported to the Chinese and US government by their representatives as decision-making reference. Meanwhile, forums sometimes are also held during the event in order to make the public know more about the event and enhance the consensus between the two sides.
(Edited by Zhang Shundong)