When the first coronavirus outbreak caused China to plunge into an unprecedented health crisis, everything indicated that it would not raise its head in 2020. A few months later, the Asian country has taken the lead in the world and is becoming one of the few economies showing encouraging data.
Can China help the world out of the crisis?
While some parts of the world are slowly beginning to recover from the devastating effects of the pandemic and others languish are threatened by the new waves of infections, domestic macroeconomic indicators catapult China into the coveted 2020 category of a clearly growing economy.
Tesla, Starbucks, and many other companies put their heads in their hands in February in a country confined and without hope of recovering for a long time. Now, these companies see their profits grow in China while in the rest of the world they do not stop falling.
For example, the Marriott International hotel chain had 60% occupancy in its establishments in the second quarter of this year, a figure that is not too far removed from the 70% of the same period in 2019. Along these lines, the financial company JP Morgan Chase recently revised its growth forecast for China, raising it from the initially estimated 1.3% to 2.5%.
Companies around the world, including Americans, are aware of this reality, and the world economics and development expert at the Chinese Institute for International Studies Xu Xuemei explains to Revyuh that the new situation will cause US companies to inevitably see their dependence on the Chinese market increase.
“China’s GDP has exceeded $ 10,000 per capita and will continue to grow, while the sector of the population with an average level of income exceeds 400 million inhabitants. These are indicators of the enormous potential that the Chinese market has,” he says.
On the other side of the world, the United States, which began by making fun of the “Chinese virus”, is now suffering the devastation of a pandemic that is weighing down its economy. According to analysts at Deutsche Bank, before the pandemic, the US GDP was forecast to grow by 8.5% between 2019 and 2023, while now that value remains at a modest 3.9%.
This highlights the opportunity for China now to outperform the US on various economic indicators.
“First of all, this is due to the fact that China has an advantage since it came out of the epidemic first (…). Second, the period after the epidemic in China coincides precisely with the beginning of the 14th Five-Year Plan. as well as the end of the first centennial objective and the beginning of the second,” Xuemei explains.
In addition to the economic factors that show China’s potential, the economist highlights “the fact that China is continuously opening up and invites other countries to benefit from its fruits”, referring to the foreign investment law that was passed in January and that facilitates the conduct of business by foreign companies in Chinese territory.
All this points to the possibility that the global crisis of this 2020 will act as a lever for the main economic powers to collaborate more closely. In other words, it may turn out that economic and commercial cooperation with the Asian giant becomes essential for other countries if they want to get out of the crisis.