Written by Arianna Pollack
When the coronavirus began to sweep across the globe in 2020, worldwide shutdowns caused the global economy to grind to a halt. The world saw millions of job losses and sudden workplace closures. It has now been over a year since the first shut-downs, and countries are trying to expand their economies and recover from the economic shock induced by the COVID-19 pandemic. Although there seems to be a light at the end of the tunnel, almost all countries with major economies are still fighting to see economic growth. There is one exception— China.
In January 2020, Wuhan, China was the first city to lock down due to detection of new COVID-19 cases (AJMC, 2020). Today, China is the only major country to end 2020 with economic growth after COVID-19 (“How China Became,” 2020). However, China still faced serious economic consequences at the start of the pandemic. Arguably, the Chinese government’s approach to handling the onset of the pandemic played the main role in propelling the economy forward later on. Wall Street Journal’s China Bureau Chief, Jonathan Cheng, described China’s economic approach of suspending economic activity in the early stages of the pandemic as “ripping the bandaid off” (“How China Became,” 2020). China essentially decided to take an economic hit by prioritizing the public health crisis first. The graphs below depict the change in number of COVID-19 cases in China and the change in quarterly GDP throughout 2020.
The state of China’s economy fluctuated closely with the country’s public health situation. Strict public health measures that were quickly implemented caused economic activity to halt in the early stages of the pandemic. In late January 2020, the Chinese government locked down Wuhan and many other cities in Hubei Province (Uretsky, 2020). Within hours of China’s announcement that they were shutting down Wuhan, transportation into and out of the city was closed, with absolutely no exceptions (Graham-Harrison & Kuo, 2020). Restrictions soon tightened, with some areas barring residents from leaving their homes at all and requiring families to order food and necessities (Graham-Harrison & Kuo, 2020). The lockdown caused a steady decline in coronavirus cases, but came with a significant economic tradeoff. China’s economy contracted by 6.8% in Q1, the country’s first contraction in decades (Bloomberg, 2020).
By April 2020, China ended its lockdown of Wuhan and reopened the city. This allowed factories to begin reopening and increasing manufacturing capacity. By the third quarter, China’s GDP grew by 4.9% (White, 2020). Miguel Chanco, Senior Asia Economist at Pantheon Macroeconomics, stated that China’s success in preventing small clusters of COVID-19 from erupting was key to retaining positive economic growth momentum in Q3 (White, 2020). Public health measures, such as a nationwide contact tracing program, continued to remain in place after the lockdown ended. China’s efficient and effective response to the COVID-19 epidemic has led to China’s economy to beat analysts’ expectations by expanding 2.3% in 2020, with a projected growth of 8.4% in 2021 (Cheng, 2021; Salmon, 2020). Conversely, the US economy contracted by 3.6% in 2020 and is projected to grow by 4% in 2021, with a net increase of only about 0.4% since the start of 2020 (Salmon, 2020). The figures below depict first the number of daily new confirmed COVID-19 cases in China and the United States, and then GDP in both countries, highlighting the significant difference in both.
This disparity is partially due to the differences in each country’s political system. The structure of the Chinese authoritarian government affected the means in which they could implement and enforce strict lockdowns and mandatory contact tracing protocols. In contrast, the US democracy does not have the autonomy to quickly mandate contact tracing protocols that may violate individual privacy. However, the eradication of COVID-19 cases in countries such as Taiwan and New Zealand indicate that other government systems have the power to implement effective public health measures as well (White, 2020). In America, Former President Trump took an approach that focused on reopening earlier than some other countries did for the number of COVID-19 cases still present in the United States. This makes it hard to determine which differences in public health protocols were due to systematic capabilities compared to leadership approach.
One could argue that a greater factor in the spread of COVID-19 stems from cultural differences that influence people’s willingness to comply with public health recommendations. Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, explained that other countries differed from America in that “they never really had this idea that there was some sort of trade-off between the virus and the severity of the lockdown” (White, 2020). In fact, data depicting China’s economic growth may even show that stricter lockdowns cause higher economic growth overall. Many people in the United States instead viewed a strict lockdown as a move that would hinder economic growth. America also has a greater distrust in science, with public health measures such as mask-wearing and social distancing seen as topics for political debate instead of a given solution.
It is important to acknowledge that it is unclear if public data from China is credible as some have questioned whether China covered up the full extent of its COVID-19 epidemic (Feng, 2020). Despite ongoing investigation into the origin of SARS-CoV-2 and distrust in the validity of some data, it is clear that the larger trends of China’s decline in COVID-19 cases and increase in economic growth still hold.
China’s success in eradicating COVID-19 and kickstarting economic growth provides many lessons for the United States and other major countries around the world. It highlights the importance of non-pharmaceutical interventions, such as containing the virus through early detection. It also underscores the importance of having a government team already established to contain the emergence of infectious diseases, especially since time is of the essence when containing an outbreak. It is easy to reflect on the past and analyze what the United States could have done differently in handling the pandemic. However, there is still a long road ahead and action people around the world can take to continue improving the current situation. China’s shocking economic growth can serve as an indicator that public health and economic well being are intertwined in many ways. Sometimes it is better to suffer a temporary economic decline in order to help the economy bounce back after a crisis.
References
AJMC. A timeline of COVID-19 developments in 2020. American Journal of Managed Care. https://www.ajmc.com/view/a-timeline-of-covid19-developments-in-2020.
Bloomberg. (2020, April 17). Coronavirus sees China’s GDP record first contraction since at least 1992. Fortune. https://fortune.com/2020/04/16/china-q1-gdp-2020-coronavirus/.
Cheng, J. (2021, January 18). China Is the Only Major Economy to Report Economic Growth for 2020. The Wall Street Journal. https://www.wsj.com/articles/china-is-the-only-major-economy-to-report-economic-growth-for-2020-11610936187.
Elanah Uretsky, T. C. (2020, November 28). What China did right in handling Covid-19 pandemic – and the United States did not. Scroll.in. https://scroll.in/article/979357/what-china-did-right-in-handling-covid-19-pandemic-and-the-united-states-did-not.
Feng, E. (2020, May 7). China Says It Contained COVID-19. Now It Fights To Control The Story. NPR. https://www.npr.org/2020/05/07/851255361/china-says-it-contained-covid-19-now-it-fights-to-control-the-story.
Graham-Harrison, E., & Kuo, L. (2020, March 19). China’s coronavirus lockdown strategy: brutal but effective. The Guardian. https://www.theguardian.com/world/2020/mar/19/chinas-coronavirus-lockdown-strategy-brutal-but-effective.
Salmon, F. (2020, December 29). How China’s economy won 2020. Axios. https://www.axios.com/how-china-won-2020-2f3cb621-cef6-43f0-b1c0-07c010b5d3de.html.
Wall Street Journal. (2020, July 16). How China Became the First Major Economy to Grow After Coronavirus [Video]. WSJ. https://www.wsj.com/video/how-china-became-the-first-major-economy-to-grow-after-coronavirus/64D87730-1EEF-49F4-BF3C-C82C6F6042B6.html
White, M. C. (2020, October 19). China just became the first country to grow its economy after Covid-19. What lessons can the U.S. learn? NBCNews.com. https://www.nbcnews.com/business/economy/china-just-became-first-country-grow-its-economy-after-covid-n1243898.