China Demonstrates that No Economy is Immune to the Effects of the Coronavirus – Elizabeth Elliott

The Chinese government is working to expand domestic demand in order to promote public consumption. This investment in the public is to be funded by special central and local government bonds, and could be worth as much as 4-5 trillion yuan, or $566-708 billion, for the year. Despite these efforts, China still faces a major problem. Rural Chinese have essentially become an underclass in recent years as the middle class has grown. Restrictive practices dating back to the 1950s, such as welfare systems that tie people’s benefits to their place of birth rather than where they live, inhibit people living in rural China, preventing them from becoming active participants in the Chinese economy. Despite efforts by the government, the Chinese government will not be able to grow until it addresses the problems of the rural underclass. The Chinese economy is dependent on its export and debts it holds for other countries, both of which have become trivial in light of the coronavirus. Now, the International Monetary Fund is saying that the coronavirus pandemic will push the global economy into the worst depression since the Great Depression, with the poorest countries suffering the most. Low-income countries with developing markets across Latin America, Africa, and a lot of Asia are expected to be hit the worst. As one of the biggest economies in the world, China is in a better spot than many other counties, but the country will be hurt by old policies that prevent the lower class from being active participants in the national economy. The effects of this virus will be felt everywhere, and nations with the weakest infrastructures and health care systems are positioned to take the worst hit. It will be scary to watch the economic downfall continue to unfold, and China will likely stay in the spot line due to its global economic power. The inability of China to recover economically from the coronavirus demonstrates that no nation, or person, in the world is immune to the effects of the coronavirus.   

“China’s Leaders Focus on Domestic Economy as Global Risks Rise,” Bloomberg News, 8 April 2020, https://www.bloomberg.com/news/articles/2020-04-09/china-s-leaders-focus-on-domestic-economy-as-global-risks-rise

Crutainger, Martin “International Monetary Fund Head Predicts Coronavirus Will Trigger ‘Worst Economic Fallout Since the Great Depression,’” Time, 9 April 2020, https://time.com/5818819/imf-coronavirus-economic-collapse/

Roberts, Dexter, “Don’t Count on China to Lift the Global Economy,” Foreign Affairs, 8 April 2020, https://www.foreignaffairs.com/articles/china/2020-04-08/dont-count-china-lift-global-economy

  1 comment for “China Demonstrates that No Economy is Immune to the Effects of the Coronavirus – Elizabeth Elliott

  1. lmb4df
    April 27, 2020 at 7:25 pm

    Hi Betty :),

    Thank you for this interesting and well-written post! I agree, it has definitely been scary to hear about the predicted economic effects of this pandemic, some of which we are already starting to feel. Your comment that the low-income countries with developing markets will fare the worst is upsetting. Although COVID is certainly global, it has hit some countries, like the US, harder than others. Given the fact that most countries with developing markets have had fewer cases (it’s all relative), I didn’t initially consider the severity of the financial consequences that they would experience. This post underscores the truly global extent of this crisis – countries who don’t experience the medical burden of COVID at its most extreme will experience an even more severe financial burden.

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