Daily Management Review

Chinese Government Economist Says Country’s Long-Term GDP Growth Not To Be Affected By Virus Outbreak


Despite the deadly outbreak of the coronavirus, it would be possible for China to achieve its long-term goal of doubling gross domestic product and incomes this year, said an influential economist positioned at the top of a Chinese government think tank.
Cai Fang, the vice head of the Chinese Academy of Social Sciences (CASS), said in an article in the People's Daily, the newspaper of the Chinese Communist Party, said that there will only be a one-off hit on the Chinese economy and there will be growth in demand in the economy very quickly.
"Although the temporary impact caused by the epidemic will slightly reduce the growth rate and other development indicators, it will not delay the fulfillment of the goal of building a moderately prosperous society," Cai said.
For the ruling Communist Party, the current year is crucial one as it is pushed to fulfill its target of doubling gross domestic product (GDP) and incomes in the decade to 2020.
Cai said that if the Chinese economy was able to achieve a growth rate of just 5.7 per cent, it would be enough for the economy to achieve the target of doubling GDP and incomes.
The most recent outbreak of the coronavirus could knock off as much a 2 percentage points or more from the current quarter compared to the 6 per cent expansion in the last quarter, analysts believe. However they also believe that if the virus reaches its peak soon, here should be a sharp rebound in business and consumer activity. That would be similar to what was experienced by the economy in 2003 when there was an outbreak of the SARS epidemic in the country.
Cai said that policy tools should be used by the Chinese government in a timely and flexible manner and implement "unconventional policy tools" for providing support to the economy. He however did not deliberate further on the tools. 
Measures such as pumping in more liquidity into the banking system, providing re-lending and fiscal support for some firms, have already been taken by the Chinese government and analysts believe that it will have more stimulus measures in the near future to support the economy.
Cai said that there can be higher unemployment and lower incomes in the current quarter because resumption of operations of companies have been delayed due to the delay in the returning to the cities to work by China’s migrant workers due to the coronavirus epidemic.
He said that the government and authorities should allow migrant workers to return to the cities in the regions that have not been hit hard by the epidemic while allowing companies to restart their operations provided that there is no specific threat of further spreading of the coronavirus because of such relaxations.