Zhang Yansheng: Strengthening Scientific Prevention and Control of the Pandemic and Preparing for Work Resumption

By Zhang Yansheng, Chief Researcher, China Center for International Economic Exchanges

On 31 January 2020, the World Health Organization declared the novel coronavirus outbreak a Public Health Emergency of International Concern (PHEIC) and consequently, many countries have adopted measures accordingly, such as evacuation, reduction of flights, immigration clearance, visa and travel restrictions. As of 12:56, February 9, 2020, 303 cases were confirmed outside of China, of which 1 confirmed died. As the largest trading partner of more than 120 countries, China’s contribution to world economic growth reached 34% in the past decade. Wuhan is an important central hub of China, has a highly mobile population and more than 1.3 million university students. The pandemic is contagious and it is pretty hard to predict its development. Any panic will cause a great negative impact on investment expectations, consumer confidence and economy. In recent days, the pandemic situation in China has been gradually stabilized and we need to prepare for an orderly work resumption.

I. We should strengthen scientific prevention and control of the pandemic.

As of 12:56, February 9, 2020, the number of confirmed cases in China was 37,251, with an increase of 2,653 new cases, which is the first time that the number of new cases fell below 3,000 since February 3. There were 813 deaths and 90 of them are new cases, representing a fatality rate of 2.2% (less than the mortality rates in China (9.2%) and the world (9.6%) during the SARS period in 2003).

The pandemic has the following six characteristics: first, Hubei Province is the epicenter of the pandemic as it has 27,100 confirmed cases, 2147 new cases and 780 deaths. Among them, 14,982 cases were confirmed in Wuhan with 1379 new cases and 608 deaths; 2436 cases in Xiaogan and 29 patients were dead; 2141 cases in Huanggang and 43 patients were dead. Second, Guangdong and Zhejiang have become the hardest-hit area due to their close proximity to Hubei. During the same period, 1120 cases were confirmed in Guangdong and 1 died, while Zhejiang confirmed 1057 cases but no death. Third, the central region of China was also hit hard by the pandemic. 3390 cases were confirmed in Henan, Hunan, Anhui and Jiangxi provinces, accounting for 9.1% of the total cases in China. Among them, there were 1033 cases in Henan (6 deaths); 838 cases in Hunan (1 death); 779 cases in Anhui (1 death); and 740 cases Jiangxi (zero death). Four, the pandemic was better controlled in Beijing, Shanghai, Shenzhen and Guangzhou: 326 cases in Beijing and 2 deaths; 292 cases in Shanghai and 1 death; 364 cases in Shenzhen and 304 cases in Guangzhou with zero deaths. Five, the pandemic is generally controllable in Jiangsu (468 cases), Shandong (435 cases), Chongqing (446 cases), Sichuan (386 cases) and Heilongjiang (307 cases and 6 deaths). Lastly, 17 provinces, municipalities and autonomous regions have less than 250 confirmed cases, mainly in the northern and western regions, and 11 of them have zero deaths.

II. The impact of the pandemic on China’s economy is temporary and localized.

As of 12:56, February 9, 2020, the confirmed cases and death in Hubei accounted for 72.7% and 95.9% of China’s total. In Wuhan, the conformed cases and death accounted for 40.2% and 74.8% of China’s total. At present, the number of new cases nationwide has gradually declined and the situation will improve markedly soon.

Generally speaking, the pandemic will impact the following six aspects.

First, the impact on the consumer and service industries. In 2019, the contribution of final consumption expenditure to China’s economic growth was 57.8%, and the proportion of the tertiary industry accounted for 53.9% of GDP. The economy of Hubei, Anhui, Jiangxi, Henan and Hunan accounted for about one fifth of the national economy. The closure of the cities and other measures will have a great impact on the tourism, film and television, entertainment, catering, and consumer goods industries in Wuhan and the above-mentioned regions from January to February. It is very uncertain as to whether work can be resumed in March. If the pandemic can be brought under control, the consumption and service industries in most regions will begin to resume from the second quarter.

Second, the impact on industrial production. Automotive, communications and electronics, biomedicine and other industries are important pillars of Wuhan’s industry. However, the industrial chain of Wuhan is different from that of Guangdong, Jiangsu, Zhejiang, Tianjin and other places because its international participation is relatively low. Thus, the loss suffered by Wuhan will have a relatively limited impact on the national and global supply chain. Wuhan is a vital transportation and logistics hub and therefore, we have to restore logistics, business flow, capital flow and information flow as soon as possible.

Third, the impact on foreign trade. As an important city in central China, Wuhan’s dependence on foreign trade is only 14.5%, which is not only far lower than the developed areas along the east coast, but also lower than the national average of 33.7%. Its economic structure is dominated by domestic demand. Furthermore, the impact of the pandemic in Wuhan on China’s goods trade is expected to be relatively small because the peak of the pandemic occurred during the Chinese New Year holiday. The important thing is to maintain good communication with the EU, ASEAN and the Belt and Road-related foreign trade customers and eliminate their doubts and fears. In the field of services trade, the outbreak will have a greater impact on cross-border tourism, research and development services, technical services, information services and professional services because the interpersonal connection is essential for these industries. However, China has a huge deficit in service trade and some overseas spending such as tourism will be transformed into domestic consumption, which is conducive to domestic consumption.

Fourth, the impact on foreign capital. Currently, two important changes have taken place in China’s actual use of foreign capital: on the one hand, the foreign capital has changed from “cost-driven” to “market-driven”. On the other hand, it changed from manufacturing to the service sector. The huge size of China’s domestic market and Wuhan’s locational advantage means that the impact of the pandemic in Wuhan on the actual use of foreign capital will be temporary and limited. With the implementation of the Foreign Investment Law and other supporting regulations, and a better environment for investment and the rule of law, foreign investment in Wuhan, Hubei and China will continue to grow.

Fifth, the impact on prices. Affected by the pandemic, the pressure to raise prices will be intense. On the one hand, the price increase in pork and energy have put CPI under pressure. The pandemic will cause the price of food, drugs and vegetables to rise. On the other hand, governments at all levels are strengthening procurement and storage of major medical supplies, which is likely to increase pressure on a price increase.

III. Economic activities and society should return to the new normal as soon as possible but public health governance reform is more important.

From February 10, most areas in China will resume work and production. The pandemic prevention and control have shifted from the previous “information transparency, isolation observation and active response” to “precise and scientific prevention and control”. For example, the number of confirmed cases in Guangdong is one in 100,000(one death only), one in 50,000 in Zhejiang (zero death), which means that the pandemic has basically been stabilized and work can be resumed. The four central provinces, however, Henan, Hunan, Anhui and Jiangxi, still need to make great efforts in pandemic prevention and control, while preparing for production resumption. Other provinces, municipalities and autonomous regions have confirmed cases of less than 500, are also eligible for work resumption. Scientific pandemic prevention and control has become very important for eliminating widespread fear.

 2020 is not only the final year of building a well-off society in an all-round way and the “13th Five-Year Plan”, but also the year to plan for the construction of a socialist modernized country and the “14th Five-Year Plan”. Even severe pandemic will not change China’s economic stability and long-term improvement. After the pandemic has been stabilized, governments at all levels will make greater efforts to keep the economic operation within a reasonable range. At the same time, we must promote high-quality economic development, build a modern economic system and promote the modernization of governance. Especially, a highly transparent assessment and inspection by international experts should be arranged as soon as possible to cancel the public health emergency of international concern (PHEIC). To achieve that, we should implement precise and comprehensive policies and improve public medical services.

The pandemic is a test of China’s ability to deal with sudden public health events, and a new starting point for China to promote the construction of a socialist modernized country with Chinese characteristics. The following eight recommendations are made to deal with the pandemic in the future.

The state should establish an emergency response committee for major incidents, which is responsible for overall coordination during sudden major public events.

Promoting high-quality development of society should be put on the agenda, including the social responsibility of government, enterprises and individuals.

Attaching more importance to science. Start from a young age, we should encourage people to pay more respects to scientific talents, follow scientific laws, pay attention to scientific ethics and learn more about science.

We should reform the Red Cross, disease prevention and control centers and other organizations in accordance with the spirit of the governance system of the Fourth Plenary Session of the 19th Central Committee of the Party.

Promoting educational activities for public health, family health and personal hygiene.

Giving priority to Wuhan as a pilot of the national high-quality development strategy, including the formation of core areas of the domestic market, demonstration areas of the construction of a modern economic system, and leading areas of the construction of a public health emergency system.

Paying attention to basic research, applied basic research, common technology and public technology research.

Lastly, carrying out international cooperation among developing countries to prevent and control virus transmission. Help developing countries in need through formal or informal international cooperation.