China has been dealing with the COVID-19 pandemic for 3 months now. Looking at what the Chinese economy is currently going through is in a way like knowing what the future might hold for the rest of the world. Up until a few weeks ago, economists were predicting a swift economic recovery in China; What we might call a V-shaped recovery.
In the depth of the COVID-19 pandemic outbreak, China’s economic output immersed massively; That would be the first part of the V. A rapid upswing, just as steep as the drop, was predicted to be the second part of the V. But even though businesses in China are slowly re-opening; That second part of the V is looking less and less likely to happen. It is in fact still too early to tell but as of now, there hasn’t been a V-shaped recovery seen in the Chinese economy. There can be numerous reasons for that.
Reduction of demands
One is that though businesses are up and running in China, they don’t anyone to sell to. Since other countries are busy dealing with their own Coronavirus outbreaks, demand for Chinese goods has plunged; That means trouble for manufacturers. It really is a global pandemic.
It may come back!
The fear of the virus’s return is another threat to the Chinese economy as manufacturers and factories are hesitant to pull back some restrictions. Restrictions that were made to get the virus under control and make doing business a lot harder; such as spacing and supplying the employees with cautionary equipment. Chinese authorities are worried if they lift the restrictions all together there might be a risk of the virus returning; Something that every country will have to deal with when they get to the same position.
The pandemic has financial stress on everyone all around the globe. Considering that consumer spending is an immensely important part of the economy in various countries, people are starting to curtail their spending and saving up like crazy; When these decisions are multiplied by millions the cutbacks start to add up to a huge sum of money.
With all that being said, the important thing to remember is that this virus is containable when taken seriously; Recovery is possible and near.