(Yicai Global) July 7 -- China is on a significantly different path to economic recovery from the rest of the world because of the country’s policy response and the effect of its epidemic control efforts, according to the chief economist at J.P. Morgan Chase.
Ahead of other countries, China’s economy is on track to return to the level expected before the coronavirus by the end of next year, Zhu Haibin said recently.
Speaking at a seminar jointly organized by the International Monetary Fund, Yicai Research Institute, Yicai Global, and the Shanghai Advanced Institute of Finance, on July 3, Zhu noted that China’s recovery is progressing faster than that of other countries.
The most strident lockdowns came in the first quarter for China and in the second quarter for Western economies because the virus broke out at different times in difference places. China and East Asia did a better job of controlling the virus and reopened their economies after it was under control. But the contagion has worsened in other countries, including the US, after they reopened their economies.
As a result, both J.P. Morgan Chase and the IMF believe that China will be the only major economy with positive growth. J.P. Morgan Chase recently raised its estimate for China’s growth this year from 1.3 percent to 2 percent, while its estimates for other countries are basically negative, Zhu said.
Last month, the Washington-based IMF forecast growth of just 1 percent for China’s economy in 2020.
Another important indicator is the extent of the economic recovery in the next year or two. According to J.P. Morgan’s forecasts, Asia’s gross domestic product at the end of next year will be 5 percentage points lower on average than the expectations before the outbreak. But China, as the best-performing economy, will be ahead of the curve and return to the pre-outbreak GDP level ahead of other countries.
Zhu also noted that China is now prudent about fiscal stimulus, with deficits in developed countries, including the US, Germany and Japan, reaching 30 to 50 percent of GDP, while China’s is only about 3 percent to 4 percent higher than last year.
China’s policy response is mainly focused on corporate bailouts and public investment aimed at stabilizing macroeconomic growth, but compared with Western countries, it is weaker in the household sector, Zhu said, adding that future policies should focus on low-income people.
Editors: Dou Shicong, Peter Thomas