While the Covid-19 pandemic was initiated by China (Wuhan Province) and it appeared that the Chinese government was taken by surprise, the subsequent successful management of the response to the pandemic strengthened Chinese citizens’ confidence in the communist regime of China, increased the national confidence and pride of the Chinese (always comparing it to the failed management of the pandemic by the EU, UK and US), while allowing China to gain tremendous momentum in the Chinese economy in 2020 , leading to explosive economic growth in the second half of 2021.
by Thanos S. Chonthrogiannis
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The growth of the Chinese economy in 2020 indicates its global economic influence
China’s economy and always compared GDP level is compared to the level of the US economy (no comparison is made with the GDP per capita index).
Recent estimates by the Trust Economics-https://trusteconomics.eu and which are in line with the estimates we made in February 2020 for the development of the Chinese economy including the pandemic (please read the analysis entitled «Trust Economics Forecast for 2020» section China is the only economy that will continue to grow on the planet for 2020.
As we mentioned in the above analysis, China’s growth rate for 2020 would reach 4% of GDP per year for 2020.
So despite the downturn in the Chinese economy’s potential – due to a pandemic – China will further strengthen its comparative advantage over the US and the EU, which will move into single-digit recession figures for 2020 (US, Germany) when France and Italy (EU) and the UK move close to double-digit recession figures for 2020.
Trust Economics for 2021 predicts growth in the Chinese economy of close to 9.3% and given that most of the huge internal market has not yet unfolded its consumer dynamics consumption is expected to show exponential growth due to the increase in disposable income in growing population groups but also due to the forced accumulation of income imposed by pandemic measures in 2020 , which will liberate consumption in domestic products.
For November 2020, China’s industrial production index hit a decade high. Export performance continues to be strong with no signs of a departure.
The manufacturing PMI index rose in November to 52.1 points from 51.4 in October. In the services sector, the PMI rose to 56.4 points from 56.2 points in October. Record levels since 2012.
China’s foreign exchange reserves stood at $3.178trillion for November and compared with $3.128trillion in October. The exchange rate of the US dollar against six major currencies depreciated in November by 2,3%, and as investors moved their funds to more risky investments due to their optimism for global growth following the finding of the Covid-19 vaccine. The yuan was appreciated by 1,7% against the US dollar.
China had 62,64bn ounces of gold at the end of November, while the value of gold stocks fell to $110,41bn at the end of November from $117,89bn at the end of October.
Foreign investment and the capital inflows of foreign capital into Chinese equities and government bonds have strengthened as China leads global growth after the Covid-19 era.
China’s comparative advantage for 2020 is that it has dealt rapidly and highly effectively with the Covid-19 pandemic on its territory and before Q12020 is completed and is now in its final phase, which is completed through rapid and effective vaccination.
This event taking place in the second half of 2020 has resulted in the Chinese economy and society having entered full and stable economic and productive normality. In recent months not a single death from Covid-19 has been recorded in China, when economic normality to return to the US, UK and EU should enter the second half of 2021.
China’s global political influence
Asia’s global political giant through China was shown in the teleconference between the leaders of the G20 group of countries that took place on Sunday, November 22, 2020.
At that conference it was Chinese President Xi Jinping who proposed to the other nineteen leaders the adoption of a global control mechanism against Covid-19 in terms of citizens’ movements and the other leaders agreed to adopt it.
This proposal by the President of China is based on QR code technology, which is successfully implemented in China and ensures the health security of travel within China.
Adopting this application at global level would ensure health security by allowing for the safe opening of borders between countries.
China’s President argued that the pandemic requires mandatory harmonisation of states and the adoption of rapid procedures to ensure safe travel for travelers.
The useful and highly necessary tool will be the proposed use of QR codes which can be used to recognise and attest to the health status of travelers based on nucleic acid test results.
This proposal by the President of China and its adoption by the other leaders shows China’s increased global political influence while highlighting the technological lead of the “Red Dragon” in tackling the pandemic. It also shows China’s leadership in applied technology to tackle the pandemic.
This technology was developed by Ant Financial and was used as a means of electronic payments by Alipay companies of Chinese interests of the Jack Mc Group (founder of Alibaba). This technology is also used in Tencent’s WeChat app.
Users of these media load and encode the data they wish to store on their own and willingly.
QR code technology is also used in other countries such as Mexico,Australia, Singapore for the purpose of digital tracing.
The global dynamics of Chinese companies
At this stage the Chinese digital giants-companies (e.g. Huawei, Alibaba etc.) now have the possibility, due to their digital achievements and avant-garde e.g. 5G network, to self-finance due to their huge commercial success both domestically and globally.
Now all these Chinese companies active in the development of applied digital technology have overcome (due to their economic size) the phase when as companies were accepting financial support through huge government subsidies, financial facilities and tax exemptions by copying or stealing at the same time and always on the basis of US complaints, American technological achievements.
As a result, China can use as a bargaining chip that it will stop any state subsidies to Chinese companies and when it comes to talks with the US to limit their Chinese trade surplus.
The result is that the Chinese system in the field of applied digital technology has now developed its own global dynamics and only the US could compete with it for the time being but it may not be possible within the next decade.
At the same time China became the second country in the world to place its flag on the Moon after the third successful mission of the Chinese Chang’e-5 spacecraft in seven years.
On the other hand, the EU does not accept to use China’s experience to tackle the pandemic on its territory because it considers that it is based on absolute political control and centralisation (strict internment imposed by the Chinese authorities, continuous and massive tests, digital recording of the social contacts of new cases) with the help of digital applications.
Perhaps the failure so far to tackle the pandemic on EU soil is behind this excuse.
