Page 38 - 2021 White Paper
P. 38
1 White Paper on the Business Environment in China
losses were spread out over years. This would benefits. Such a sharp and staggering increase
occur in a single springtime. And whatever data has never been seen before, not even at the peak
the government produces would likely understate of the global financial crisis in 2009. Disruptions
the true reality of the economic hit, because caused by the virus rippled through emerging
the unemployment rate measures only people markets. After showing little movement early in
who are actively looking for work. Unemployed the year, April indices from purchasing manager
waiters might not apply for jobs when all the surveys (PMIs) were pointing to sharp slowdowns
restaurants are closed. Neither, in all likelihood, in manufacturing output in many countries,
would many hotel staff, casino workers, theater reflecting drops in external demand and growing
ushers, or others. Yet what was scariest about expectations of declining domestic demand.
the new economic projections was that they On a positive note, China was seeing a modest
were probably too rosy. A federal-government improvement in its PMI after sharp declines early
plan to combat the pandemic estimated that it in the year, despite weak external demand. The
could last 18 months and hit in “multiple waves” modest improvement in economic activity in China
that would require some degree of prolonged was reflected in daily satellite data on nitrogen
social distancing. If there was any hope in this dioxide concentrations in the local atmosphere—
dark outlook, it was that the federal government a proxy for industrial and transport activity (but
likely had more power to soften the economic also the density of pollution as a by-product of
blow than it did to contain the virus. And unlike fossil fuel consumption). After a steep decline
during the last economic crisis, in 2008 and 2009, from January to February during the acute phase
both parties were in general consensus about of the pandemic, concentrations increased as
the scope of the fiscal response required. With new infections fell, allowing China to gradually
warnings that the unemployment rate could hit relax its strict containment measures. The
a staggering 20% — by far the highest since the China recovery, albeit limited, was encouraging,
Great Depression—if Congress didn’t act. Trump suggesting that containment measures could
and his advisers called for US$1 trillion or more in succeed in controlling the epidemic and pave the
stimulus spending (Berman). way for a resumption of economic activity. But
there was huge uncertainty about the future path
America was not alone. The Covid-19 pandemic of the pandemic and a resurgence of its spread in
pushed the entire world into a recession. The China and other countries could not be ruled out
economic damage was mounting across all (Bluedorn et al.).
countries, tracking the sharp rise in new infections
and containment measures put in place by To stem further spread of the virus, authorities
governments. China was the first country to around the world implemented measures to lock
experience the full force of the disease. European down countries and cities to varying degrees. That
countries such as Italy, Spain, and France were included closing borders, shutting schools and
next, followed by the United States where the workplaces, and limiting large gatherings. Those
number of active cases grew even more rapidly. restrictions, which the International Monetary
In many emerging market and developing Fund called the “Great Lockdown,” brought much
economies, the epidemic appears to be just of global economic activity to a halt, hurting
beginning. In Italy, the first country in Europe to be businesses and causing people to lose their jobs.
severely hit, the government imposed a national This was a truly a global crisis as no country is
lockdown on March 9 to contain the spread of the spared. By April 2020, many economists warned
virus. As a result, attendance in public places and that lockdown measures around the world would
electricity use declined dramatically, especially accelerate job losses. More than 26 million jobs
in the northern regions where infection rates were lost over a five-week period starting in mid-
have been considerably higher. The economic March in the US. The country ’s unemployment
consequences of the pandemic impacted the rate of 4.4% in March was the highest since August
United States with unprecedented speed and 2017. The US was not alone in dealing with rising
severity. In the last two weeks in March almost unemployment. Australia and South Korea also
10 million people applied for unemployment registered an uptick in unemployment rates,
38
losses were spread out over years. This would benefits. Such a sharp and staggering increase
occur in a single springtime. And whatever data has never been seen before, not even at the peak
the government produces would likely understate of the global financial crisis in 2009. Disruptions
the true reality of the economic hit, because caused by the virus rippled through emerging
the unemployment rate measures only people markets. After showing little movement early in
who are actively looking for work. Unemployed the year, April indices from purchasing manager
waiters might not apply for jobs when all the surveys (PMIs) were pointing to sharp slowdowns
restaurants are closed. Neither, in all likelihood, in manufacturing output in many countries,
would many hotel staff, casino workers, theater reflecting drops in external demand and growing
ushers, or others. Yet what was scariest about expectations of declining domestic demand.
the new economic projections was that they On a positive note, China was seeing a modest
were probably too rosy. A federal-government improvement in its PMI after sharp declines early
plan to combat the pandemic estimated that it in the year, despite weak external demand. The
could last 18 months and hit in “multiple waves” modest improvement in economic activity in China
that would require some degree of prolonged was reflected in daily satellite data on nitrogen
social distancing. If there was any hope in this dioxide concentrations in the local atmosphere—
dark outlook, it was that the federal government a proxy for industrial and transport activity (but
likely had more power to soften the economic also the density of pollution as a by-product of
blow than it did to contain the virus. And unlike fossil fuel consumption). After a steep decline
during the last economic crisis, in 2008 and 2009, from January to February during the acute phase
both parties were in general consensus about of the pandemic, concentrations increased as
the scope of the fiscal response required. With new infections fell, allowing China to gradually
warnings that the unemployment rate could hit relax its strict containment measures. The
a staggering 20% — by far the highest since the China recovery, albeit limited, was encouraging,
Great Depression—if Congress didn’t act. Trump suggesting that containment measures could
and his advisers called for US$1 trillion or more in succeed in controlling the epidemic and pave the
stimulus spending (Berman). way for a resumption of economic activity. But
there was huge uncertainty about the future path
America was not alone. The Covid-19 pandemic of the pandemic and a resurgence of its spread in
pushed the entire world into a recession. The China and other countries could not be ruled out
economic damage was mounting across all (Bluedorn et al.).
countries, tracking the sharp rise in new infections
and containment measures put in place by To stem further spread of the virus, authorities
governments. China was the first country to around the world implemented measures to lock
experience the full force of the disease. European down countries and cities to varying degrees. That
countries such as Italy, Spain, and France were included closing borders, shutting schools and
next, followed by the United States where the workplaces, and limiting large gatherings. Those
number of active cases grew even more rapidly. restrictions, which the International Monetary
In many emerging market and developing Fund called the “Great Lockdown,” brought much
economies, the epidemic appears to be just of global economic activity to a halt, hurting
beginning. In Italy, the first country in Europe to be businesses and causing people to lose their jobs.
severely hit, the government imposed a national This was a truly a global crisis as no country is
lockdown on March 9 to contain the spread of the spared. By April 2020, many economists warned
virus. As a result, attendance in public places and that lockdown measures around the world would
electricity use declined dramatically, especially accelerate job losses. More than 26 million jobs
in the northern regions where infection rates were lost over a five-week period starting in mid-
have been considerably higher. The economic March in the US. The country ’s unemployment
consequences of the pandemic impacted the rate of 4.4% in March was the highest since August
United States with unprecedented speed and 2017. The US was not alone in dealing with rising
severity. In the last two weeks in March almost unemployment. Australia and South Korea also
10 million people applied for unemployment registered an uptick in unemployment rates,
38
