China’s rise has been trapped by COVID-19 too
Malaysia needs the world economy to do well, in order to be a vibrant economy, especially hoisted by the prosperity of China. China seems to be the first major power to contain Covid 19. Indeed, if one goes according to the official narrative of China, the extent to which China has contained the problem of Covid 19 has been nothing but phenomenal. Between December 8 2019 and end of March 2020, China has been able to control the SARS Cov II pandemic in Wuhan, Hubei and its surrounding provinces.
In fact, despite a second wave of Covid 19 in Beijing in the middle of June 2020, China was once again able to put a stop to them. Nevertheless, amidst the impressive results, there are some who believe that China did not give a truthful picture of the number of patients, and the severity of the cases.
Not surprisingly, there are other countries who seem to regret forming various forms of strategic alliances with China, as Beijing can’t seem to get its house in order.
Sadly, there are countries who have alao followed the bad examples set by China earlier; when local Wuhan officials suppressed the severity of the problem of Covid 19. Brazil, Russia, North Korea and Indonesia are deemed to be the four countries that have not been candid about the actual number of cases affecting their countries too.
Be that as it may, the real secondary ramifications of Covid 19 are the economic impacts, especially the effects on the lives of the workers in China. In China, the economy has to grow at 6 per cent and above, in order for its Gross Domestic Product (GDP) to produce at least 20 million jobs each year. A tall order by any measure.
Anything less than 6 or 6.6 per cent, China would be in grave trouble. This is why China must hope that the world can recover in time too. Based on domestic consumption alone, China cannot witness a major economic revival single handedly.
Of the 20 million jobs to be created annuallu, for example, 8.7 million of them are fresh university graduates who want these jobs too. President Xi Jin Ping is well aware of the job problems produced by Covid
He has urged his Politburo not to declare the state of the economy, with any numerical target——that is whether Chinese GDP would be growing in 2020 or 2021 at all.
But the fact is, China also has one of the world’s widest wealth gaps. The Gini coefficient – a measure of a population’s wealth inequality – rose in 2017 for the second year in a row to 0.4670, meaning severe income inequality. China has not published the coefficient for the last two years too.
Instead, Chinese economists have been asked to describe the state of Chinese economy based on mere words. Clearly, this is a big leap backward since 1979; when China reopened its economy in the world. No will know how China would be doing and how China itself would be performing too.
In fact, China employs close to 112 million workers in the export industries. If the global economy, as the International Monetary Fund predicts, will contract by 5.8 per cent in 2021, China would find it hard going to export its goods abroad. China would also find it difficult to sustain itself economically. Why ?
If the global economy does not have a V shaped recovery in 2021, China alone cannot absorb more and more workers rushing into its domestic job markets. The Chinese Communist Party would be caught in a conundrum. Thus, China needs the world more than ever.
According to China’s statistics agency, China’s per capita disposable income was 30,733 yuan (US$4,300) in 2019, an increase of 5.8 per cent from the previous year. This now not a bad achievement.
However, per capita income in rural areas was 16,021 yuan last year, or 1,335 yuan a month, while the median rural income was 14,839 yuan, or 1,236 yuan a month.
In other words, low wages in China’s countryside—–where about 40 per cent of the population live—- have hindered Beijing’s efforts to shift the country’s economic model to greater dependence on domestic consumer-led demand.
In February 2020, China’s urban unemployment rate jumped to 6.2 per cent, the highest on record. In March 2020, it dipped slightly to 5.9 per cent as more businesses reopened. But the numbers are highly contested. Why ?
An April 2020 analysis by UBS, for example, the research estimated that 50 million to 60 million people in the hard-hit services sector may have lost their jobs or are otherwise not working, and a further 20 million people in the industrial and construction sectors may be in the same position.
China, for the lack of a better word, has a job crisis not unlike that of other countries, including the United States. Therefore, in assuming that China has recovered from Covid 19, one has to ask ourselves if the Chinese economy has been badly disrupted too ?
The answer to this question, without a shadow of a doubt, is a clear Yes. In this sense, China has risen ; only do be paralysed by the rest of the lackluster economic performance of the world too, especially the United States and European Union (EU). China is politically and economically trapped by Covid-19, just like others.