How optimistic is China's post-pandemic economic outlook?
Trucks waiting for loading containers at the Port of Rizhao, Shandong Province, China on April 16, 2020./Xinhua.

Trucks waiting for loading containers at the Port of Rizhao, Shandong Province, China on April 16, 2020./Xinhua.

Note: The following article is taken from the Chinese-language opinion column "The Real Point."

China's statistics bureau reported on Friday that the country's gross domestic product (GDP) decreased 6.8 percent in the first quarter compared to a year ago. The drop was unsurprising given that China suspended most of its economic activities to save lives threatened by the contagious coronavirus.

The economic contraction was a price that must be paid and was worth paying. Obviously, the suspension was temporary, with the nation now returning to work after a nearly two-month pause and the decline in major economic indicators narrowing in the third month—both of which send out a strong signal.

In March, the industrial output of major enterprises fell 1.1 percent year-on-year, 12.4 percentage points less than the decline in January-February. The total value of imports and exports was down by 0.8 percent year-on-year, 8.7 percentage points less than the decrease in the first two months.

The Purchasing Managers' Index (PMI), an indicator of business activity, rose to 52 in March from 35.7 in February. A PMI reading over 50 indicates expansion, while a reading below 50 suggests contraction. The new figure provides evidence that the Chinese economy is rebounding rapidly.

Meanwhile, the country's employment remained generally stable. In March, the surveyed unemployment rate in urban areas was 5.9 percent, 0.3 percentage points lower than that of February. In March, the consumer price index, a measure of inflation, went up by 4.3 percent year-on-year, 0.9 percentage points lower than February, which reflects increased food supply and enhanced logistics services.

Notably, the rapid growth of China's new economic momentum continues. In the first quarter, the information transmission, software and information technology services sector went up by 13.2 percent. The financial services sector rose six percent and Internet-based sectors, such as e-commerce, online education, and health care services, also grew quickly.

Online retail sales of physical goods were worth some 260 billion U.S. dollars in March, up 5.9 percent from last year, 2.9 percentage points higher than the growth recorded in the first two months. Livestreaming was also booming during the epidemic.

The fundamentals of the industrial system, the forces driving the Chinese economy, haven not changed because of the disease. The country will continue to deepen reforms and open up its market, while also promoting innovation, continuously stimulating vitality, and exploring the potential of the economy—all of which are bolstering investor confidence in the Chinese market.

On the day China ended its lockdown of Wuhan, the epicenter of the outbreak in the country, Walmart announced it would invest three billion yuan, or 425 million U.S. dollars, to expand its presence in the city. On the same day, a total of 11 foreign-invested projects were signed in Wuhan with a contract value of up to 27 billion yuan, or 3.8 billion U.S. dollars.

The International Monetary Fund has predicted China will be one of the few major economies to see growth this year. It also forecast that the country would be the fastest growing major economy, with an increase of 9.2 percent next year. The prediction reflects the organization's confidence in China's long-term development.

The spreading coronavirus pandemic has increased the downside risk to the world economy. However, if the country can come up with better preparation for a long-term response to major external risks, it has a good chance to take the initiative in accelerating post-pandemic development.