The impact of the new coronavirus epidemic on my country’s economy
At the end of 2019, a novel coronavirus pneumonia epidemic broke out in Wuhan, Hubei Province. The virus originated from wild animals and was transmitted to humans through contact between humans and animals. The epidemic continues to spread around the world and is showing new characteristics. In response to the spread of the epidemic, Chinese government departments quickly adopted a series of measures, including locking down cities, strengthening diagnosis and isolation, contact tracing, and strengthening public health propaganda. In addition, our country is also actively strengthening collaboration with the World Health Organization and other international organizations to jointly respond to this global challenge and inject new vitality into the development of global health.
After long and arduous efforts, our country has successfully controlled the domestic epidemic, effectively curbed the number of infections and deaths from the new coronavirus epidemic, guaranteed the lives and property safety of our citizens, and practiced the concept of "people first, life first" .
1. The overall impact of the COVID-19 epidemic on my country’s economy
1. Impact on my country’s GDP growth
The COVID-19 epidemic has had a significant impact on my country's macroeconomy. First, the nationwide blockade and travel restrictions brought about by the COVID-19 epidemic have led to the disruption of industrial and supply chains in various industries, thus hindering the flow of international trade and putting severe downward pressure on our country's economy.
Since the fourth quarter of 2019, my country's GDP growth rate has dropped sharply, from 1.2% to -10.4%. Since then, although my country's GDP has shown an overall upward trend, the fluctuations have been severe, the downward pressure on the economy has been huge, and uncertainty has further intensified. Although our country has taken active measures to deal with the negative impact of the COVID-19 epidemic on GDP, the process and extent of economic recovery still faces many uncertainties and challenges. Therefore, we need to continue to pay attention and take practical and effective policy measures. response.
2. There are significant differences in the impact on various industries in my country
The impact of the COVID-19 epidemic on the primary industry is relatively small. Due to the traffic control adopted in various places, some labor shortages and logistics difficulties have been caused, and the sales of agricultural products have also been affected to a certain extent.
The COVID-19 epidemic has had a significant impact on the secondary industry. Many manufacturing companies have been forced to suspend or reduce production capacity due to supply chain disruptions due to lockdowns and restrictions, shortages of raw materials and isolation of workers. At the same time, weakening demand from countries around the world has further curbed my country's manufacturing industry.
The COVID-19 epidemic has had the most serious impact on the tertiary industry. Due to the need for people to maintain social distance, home quarantine and lockdown measures, consumers have lowered their requirements for catering, retail and tourism businesses, and many businesses have been deeply affected. Lockdowns and restrictions have forced many companies to lay off workers or close down, leading to massive unemployment and economic recession.
2. The negative impact of the COVID-19 epidemic on my country’s economy
1. Impact on my country’s service industry
The COVID-19 epidemic has had a huge impact on China's service industry. Affected by factors such as the outbreak of the epidemic and the implementation of prevention and control measures, many service industry departments have had to suspend operations for rectification or restrict operations. This is mainly reflected in the fact that first of all, the catering, tourism, hotel, and retail industries have been hit hard. Many restaurants, hotels, and retail stores have been closed for a period of time, and even if they resume operations, they still face low passenger flow; secondly, the tourism industry has also suffered a setback, with restrictions on domestic and international businesses. With the development of tourism activities, many people's travel plans have been canceled or postponed; thirdly, traditional physical services are limited and restricted by factors such as blockade and travel. Offline consumption has declined, and there has been a gradual shift from offline to online consumption. It can be seen that the added value of my country's service industry has dropped from 7.2% growth in 2019 to 1.9%. Since then, the volatility of the added value of the service industry has increased significantly.
2. Impact on my country’s tourism industry
The COVID-19 epidemic has had a huge impact on my country’s tourism industry. Due to the outbreak and spread of the COVID-19 epidemic, travel restrictions, lockdowns and quarantine measures have been implemented in many parts of the country, resulting in the suspension and cancellation of flights, trains and road transportation. As a result, many people canceled planned trips and the tourism industry was severely impacted.
The tourism industry involves many fields such as hotels, restaurants, travel agencies, and attractions. Due to the outbreak, many hotels and tourist attractions have been forced to close, leaving many employees at risk of losing their jobs. Travel agencies and agents are also facing huge challenges, with many people canceling their scheduled travel plans, making their financial situation even more difficult. Due to the reduction in tourism activities, my country's tourism revenue has dropped sharply, and economic revenue in other fields related to tourism has also suffered varying degrees of decline. The number of domestic passengers in my country dropped from 6.01 billion in 2019 to 2.88 billion, and has been hovering at a low level since then. The growth rate dropped from 8.40% in 2019 to -52.10% in 2020, a decrease of more than 60%. my country's domestic tourism revenue dropped from 5.73 trillion yuan in 2019 to 2.23 trillion yuan, and the growth rate dropped from 11.65% in 2019 to -61.07% in 2020, a decrease of more than 70%.
3. Impact on my country’s accommodation and catering industry
The COVID-19 epidemic has had a huge impact on my country's accommodation and catering industry. Due to various prevention and control measures, including restrictions on cross-regional travel and closed management measures, many people have canceled originally planned trips and booked accommodation services. At the same time, the catering industry has also encountered many difficulties due to the implementation of social distancing requirements and related health and safety guidelines. Many restaurants have had to temporarily close or reduce operating hours to ensure the safety of customers and employees. This has caused a significant drop in sales in my country's accommodation and catering industry, leading to a decline in profitability or even closure of many companies. The turnover of my country's accommodation and catering industry dropped from 1.09 trillion yuan in 2019 to 0.94 trillion yuan, a decline of 26.66%. However, as the epidemic is gradually brought under control and people's demand for accommodation and dining increases, the industry is gradually recovering and achieving further development.
4. Impact on my country’s social consumer goods retail industry
The COVID-19 epidemic has had a certain impact on my country’s social consumer goods retail industry. With the outbreak of the epidemic, our country has adopted a series of prevention and control measures, including closed management, traffic restrictions and other epidemic prevention measures. These measures have caused a large number of shopping malls, supermarkets and retail stores to temporarily close or shorten their opening hours, while people have also become more cautious about going shopping. Most physical stores are facing declining sales due to restrictions such as traffic restrictions and shortened business hours. The total retail sales of consumer goods in my country dropped from 40.80 trillion yuan in 2019 to 39.20 trillion yuan, and the total growth rate dropped from 8.00% in 2019 to -3.90% in 2020. After that, the fluctuation range increased and uncertainty increased.
5. Impact on my country’s express delivery industry
The COVID-19 epidemic has had a certain impact on my country's express delivery industry. First, due to the implementation of traffic control and closure measures due to the epidemic, logistics and transportation have been restricted, resulting in extended express delivery times. Secondly, during the epidemic, the flow of people decreased and business activities weakened, resulting in a decrease in order volume and causing certain problems to the operations of express delivery companies. In addition, in order to ensure the safety of employees and customers, express delivery companies also need to take a series of prevention and control measures, such as disinfection and employee health monitoring, which also increases the company's operating costs. However, with the epidemic under effective control, the express delivery industry is gradually returning to normal operations and actively responding to challenges in the new situation.
3. The positive impact of the COVID-19 epidemic on my country’s economy
Although the emergence of the new coronavirus pneumonia epidemic has had many negative impacts on my country's economic development, it is undeniable that the emergence of the epidemic has also had a positive promotion effect on my country's economic development. Since the COVID-19 epidemic mainly spreads through the respiratory tract and through the air, maintaining social distance and isolation are the main preventive measures. Such characteristics have given rise to new economic growth points.
1. The “online economy” is developing rapidly
Isolating people is an effective way to hinder the spread of the COVID-19 epidemic. The Internet is used to break spatial barriers, and the online economy has become a new hot spot. The main manifestations are: first, the rise of online education, with major universities, primary and secondary schools maintaining normal educational order through online teaching; second, the growth of online medical care, with people with non-serious diseases receiving online consultations and Diagnosis, remote surgery and other methods help patients relieve their pain; thirdly, with the development of online commerce, various companies carry out work through remote video conferencing, home working and other methods to ensure the normal operation of the company.
2. “Stay-at-home economy” has become a new way of life
As the epidemic continues to develop, home isolation has gradually changed people's lifestyles, triggering the rapid development of the stay-at-home economy. The main manifestations are: first, the time spent on entertainment at home has increased. People use online games and mobile games to relieve the anxiety and uneasiness caused by staying at home. Many game users have seen a high increase in online time; second, short videos are extremely popular, and short videos are extremely popular. Users have surged, and user online time has shown a high growth trend; third, unmanned retail has developed rapidly, and retail businesses represented by unmanned orders, unmanned delivery, and unmanned door-to-door services have promoted changes in various puzzle operation models. Gradually becoming a mature business model.
3. Accelerate the digital transformation of the manufacturing industry
Due to the outbreak of COVID-19, home isolation has become the norm for some companies. The manufacturing industry needs to keep up with the development of the epidemic, speed up the transformation and upgrading of factories with intelligent equipment, reduce the impact of "people" on production, and use digitalization and intelligence to To promote the transformation and upgrading of the manufacturing industry and ensure the high-quality development of the industry.
4. The Enlightenment of COVID-19 on my country’s Economic Development
1. Continue to increase policy counter-cyclical adjustments
In the face of the outbreak of the new coronavirus epidemic, industries such as cultural tourism, catering, accommodation and transportation have been greatly affected. The government can establish a fiscal countercyclical adjustment system, provide deficit ratio levels, increase local financial subsidies, Fiscal expenditures such as social security and medical health will improve the level of counter-cyclical adjustment of fiscal policies. The first is to increase tax cuts and fee reductions for key enterprises and industries. For industries that have been greatly affected, increase tax cuts and fee reductions, especially small and medium-sized enterprises, to ease the operating pressure they face; the second is to increase government subsidies. Expanding the scope and proportion of funds for enterprises through direct subsidies or indirect subsidies can reduce or delay enterprises' expenses in operations, social security, provident funds, etc., thus helping enterprises to overcome the short-term difficulties caused by the epidemic.
2. Maintain loose monetary policy to meet corporate financing needs
In terms of monetary policy, financial institutions can adopt effective measures such as adjusting regional financing policies, internal fund transfer pricing, and performance appraisal methods to reduce corporate financing costs and effectively alleviate the dilemma of tight corporate capital flows caused by the COVID-19 epidemic. For industries severely affected by the epidemic, financial institutions need to prioritize countercyclical adjustments and ensure the rapid recovery of the industry through various measures such as adjusting loan interest rates, improving loan renewal policy arrangements, and increasing credit loans and medium- and long-term loans.
Author: Guo Dongpo, Senior Researcher