China’s Economy under COVID-19: Short-Term Shocks and Long-Term Changes
- 1 School of Economics and Resource Management (SERM), Emerging Markets Institute (EMI), Beijing Normal University, Beijing, China
- 2 Emerging Markets Institute (EMI), Belt and Road School (BRS), Beijing Normal University, Beijing, China
Abstract
Under the impact of the epidemic and policy responses, China’s economy in 2020 is expected to maintain a “low rebound and overall soundness”. However, as a major public health event, the long-term impact of COVID-19 on China’s economy should not be ignored. On the basis of confirming preventive savings at the micro level, this paper uses the macro neoclassical economic growth model to point out that COVID-19 epidemic may promote China’s savings rate to increase the potential output level in the medium and long term. However, given the continued downturn in the global economy, a rebound in China’s savings rate may exacerbate the global economic imbalance. Therefore, the Chinese government needs to make a good plan to strengthen international cooperation while actively encouraging consumption to stimulate domestic demand.
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