China’s gross domestic product (GDP) expanded 4.9 per cent year on year in Q3, faster than the 3.2-per cent growth seen in Q2, showed official data earlier this week.
Also, in the latest World Economic Outlook report released earlier this month, the International Monetary Fund projected China’s economy to grow by 1.9 per cent in 2020, 0.9 percentage points above the IMF’s June forecast, making it the only major economy that will see positive growth this year.
The lesson from China is (that) they addressed the shock first of all and that was the principal focus of the government’s efforts in the early months of 2020. And then by containing the shock, they were able to utilise policy tools, fiscal and monetary, to then stimulate the aggregate demand after the shock had been controlled
“The most impressive aspect of the economy’s performance is that the highest priority was given to containing the outbreak of COVID-19,” said Roach.
“China’s approach to public health is strict, it’s disciplined,” which is “a model of what can be done to contain the impacts of a disease outbreak in a major economy,” he said, adding that “it’s a model that the rest of the world needs to take very seriously as an example of what is missing today and what they could do.”
A shock like a pandemic does not just go away, instead, it takes very rigorous, focused and disciplined public health actions to curtail the spread and bring the disease under control, said the famed Yale scholar.
“The lesson from China is (that) they addressed the shock first of all and that was the principal focus of the government’s efforts in the early months of 2020. And then by containing the shock, they were able to utilise policy tools, fiscal and monetary, to then stimulate the aggregate demand after the shock had been controlled,” said Roach.
“That’s an important lesson for other economies around the world,” as “massive fiscal and monetary stimulus could be undermined if you don’t have effective control over the disease,” he noted.
The economist said he expects China to see “further progress in economic growth in the fourth quarter,” and “it will be a positive number” for the year as a whole.
Meanwhile, he cautioned that challenges remain, especially given the complexity and uncertainty of the pandemic.
Further efforts in public health, health security and the social safety net, and continuing down the road of reforms, are among the aspects in which China could continue their endeavor so as to maintain the economic momentum and build up resilience, according to Roach.