Dynamic clearance puts growth of firmer footing

Work proceeds on a new bridge in Xiangyang, Hubei province, this month. YANG DONG/FOR CHINA DAILY

Policy necessary for global trade, supply chains, experts say

After working from home for a month due to a resurgence of COVID-19 cases, Beijing resident Qi Xinxin has had some good news－his new car will arrive soon, with the manufacturing plant accelerating production in Shanghai.

Qi is just one of the countless city residents whose lives have been impacted by the resurgence of the disease, which has also disrupted the economy.

However, despite the hardships experienced, experts said the dynamic zero-COVID policy will place China's foreign trade growth on a firmer footing and help mitigate pressures on the nation's overall economic growth.

Lan Qingxin, a professor at the University of International Business and Economics' Academy of China Open Economy Studies in Beijing, said: "China's successful epidemic control is based on a socialist market economy. When adopting the dynamic zero-COVID approach to protect people against the disease, some temporary suspensions and restrictions have been required, and they will have an impact on social and economic activities to a certain extent.

"But such an impact is short-term and the approach is necessary to ensure stable medium- and long-term growth of the Chinese economy, which is also important for economic recovery worldwide."

Only by quickly tackling the recurrence of COVID-19 cases, and at minimal cost, can market confidence be placed on a firmer footing, providing more time and space for the Chinese economy to continue expanding, Lan said.

"Leveraging social and economic systems to productively allocate resources, China's COVID-19 prevention and control practices have proved the nation can fully tap the advantages of the dynamic zero-COVID approach," said Lan, also deputy president of the university's School of International Trade and Economics.

"In this way, the epidemic can be contained and the long-term benefits and short-term impact on economic growth will be well balanced," Lan added.

Although having a short-term impact on social and economic activities, China's adherence to the policy is not only a responsible decision for the core interests of its people, but also benefits the global economic recovery, Lan said.

From March onward, China has faced and withstood the severest challenge to its defenses against COVID-19 since the disease emerged in Wuhan, capital of Hubei province, in early 2020. It has resurfaced in many places, including major economic hubs such as Beijing, Shanghai and Shenzhen, Guangdong province.

According to the National Bureau of Statistics, or NBS, China's GDP grew by 4.8 percent year-on-year in the first quarter, marking a steady start to this year in the face of domestic challenges and global uncertainties.

However, the nation's value-added industrial output－an important gauge of economic activity among enterprises with an annual turnover of at least 20 million yuan ($2.97 million)－rose by only 4 percent on a yearly basis in the first four months, 2.5 percentage points lower than such output in the January-March period.

Retail sales of consumer goods fell by 0.2 percent from a year ago during the first four months. In April alone, an 11.1 percent year-on-year decline was reported.

Facing downward pressure on economic growth, China is maintaining the dynamic zero-COVID policy at a time when many economies have relaxed social distancing and other restrictions, resulting in the sustainability of the policy being questioned by some observers.

The policy is not designed to realize zero COVID-19 infections, but to achieve maximum prevention and control at minimum social and economic cost, and in the shortest possible time.

Fu Linghui, a spokesman for the NBS, said at a recent news conference in Beijing that although some indicators contracted in April, the impact of COVID-19 would be temporary, and the nation's economy is on track to recovery.

In 2020, despite a dip of 6.8 percent in GDP year-on-year during the first quarter due to the emergence of the disease, China was the only major economy to achieve positive GDP growth that year.

According to the NBS, the nation's average annual GDP growth at times in 2020 and last year was as high as 5.1 percent.

Workers man an assembly line at an auto factory in Qingzhou, Shandong, last month. WANG JILIN/FOR CHINA DAILY

Improved capacity

Caroline Wu, managing director of Maersk China, part of Danish shipping and logistics giant A.P.Moller-Maersk, said demand for transportation services will surge in the Yangtze River Delta region in coming weeks.

Ocean East Logistics Co, a wholly owned subsidiary of Maersk China in Shanghai, has maintained a closed-loop management system since mid-April, helping customers with warehousing, consolidation and distribution services.

The capacity of Maersk trucking services to and from Shanghai has gradually improved to 70 percent.

Wu said, "We will work closely with our customers and partners to seek alternative solutions, including multimodal services between Shanghai and nearby cities."

Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said the dynamic zero-COVID strategy is a responsible decision aimed at reducing the possibility of new deadlier and more transmissible variants of COVID-19 emerging as the coronavirus constantly mutates.

In addition, the strategy offers enterprises clear paths to abide by related policy measures, and such policy transparency and predictability are extremely important for businesses to continue growth, Zhou said.

A surge in orders at Yangzijiang Shipbuilding Group, which is based in Jingjiang, Jiangsu province, is testimony to such growth.

Orders received by the company recently reached the highest level for nearly two decades, with about 90 percent of them placed by foreign clients, mainly from Japan, Singapore and a number of European countries.

He Minghui, the group's assistant president, attributes the rise in overseas orders mainly to surging demand at foreign shipping and energy companies, as well as his company's ability to meet such demand, which is guaranteed by China effectively controlling the epidemic.

"If China abandons the dynamic zero-COVID policy, the predictable high number of infections in the nation's manufacturing sector will disrupt global trade and supply chains, not only affecting economic recovery in many countries, but also resulting in businesses and customers facing shortages of industrial and consumer goods," he said.

Optima Integration Group, or OIG, a leading frozen products import service platform in China, has seen steady growth in the first four months of this year despite recent disruptions to cold-chain logistics.

If services at a specific port are unavailable due to a resurgence of COVID-19 cases, the use of information technology and digital tools enables the company to offer flexible services to domestic and foreign clients at other such locations.

Gao Zichun, OIG's operations director, said the introduction of detailed measures by customs authorities nationwide to smooth the operations of industrial and supply chains and assist businesses during the nation's broader efforts to safeguard foreign trade growth have helped the company operate more efficiently.

"China needs to adhere to the dynamic zero-COVID policy, despite the epidemic-related shutdowns of factories and disruptions to logistics creating obstacles for many businesses to maintain highly efficient operations temporarily," Gao said.

"If the nation relaxes COVID-19 measures, a large number of deaths will likely occur, in view of limited and unbalanced medical resources among regions and China's large population," Gao said, adding that this will have a severe impact on overall economic growth and will eventually harm all businesses.

According to a study by the OIG Institute, the company's research facility, if the epidemic spreads nationwide, the food supply industry and many others will be badly affected, Gao said.

Zhang Jianping, head of the Center for Regional Economic Cooperation at the Chinese Academy of International Trade and Economic Cooperation, said the nation's effective control of the epidemic to restore normal economic operations is invaluable in stabilizing global industrial and supply chains and shoring up economic recovery worldwide.

Chen Bin, executive vice-president of the China Machinery Industry Federation, which is based in Beijing, said, "Faced with various challenges, such as rising commodity prices and fierce competition in low-end manufacturing from Southeastern Asian economies, it is equally important for China to adopt new solutions to ensure the stability of its industrial chains while implementing the dynamic zero-COVID policy."

Adhering to the policy is evidence of China's wisdom in sustaining long-term growth, Chen said.

The nation has strengthened epidemic prevention and control measures significantly since 2020, Chen added.

Asparagus is processed at a factory in Huaibei, Anhui province, last month. LI XIN/FOR CHINA DAILY

Key advantages

Justin Yifu Lin, a former World Bank chief economist, said that faced with complicated challenges in the international economic situation, China needs to maintain dynamic economic growth while accelerating opening-up.

Speaking at a Tsinghua University economists' forum in Beijing late last month, he said latecomer advantage, a huge domestic market, considerable economic output, and a good policy environment are among China's key advantages in pursuing stable economic growth.

Nicolas Poirot, president and CEO of the China unit of Air Liquide Group, a French industrial and medical gas supplier with 120 plants in China, said the company's amount of work and logistics situation have improved in and around Shanghai with the issuance of special permits from the authorities.

These improvements have been witnessed since the first batch of companies in strategically important sectors were given approval to resume work, Poirot said.

Even though the epidemic has resulted in some unpredictability over the transportation of raw materials and products, the dynamic zero-COVID approach and united efforts from various levels of governments and industries in China have kept the group's employees safe from the epidemic, and also improved its access to supplies, he said.

Shu Jueting, a spokeswoman for the Ministry of Commerce, said at a recent regular news conference that China will continue to stabilize foreign investment and provide a better business environment and services for foreign companies.

In the first four months of this year, foreign direct investment in use on the Chinese mainland rose by 20.5 percent year-on-year to 478.61 billion yuan, data from the ministry show.

Thanks to the Chinese economy's huge scale, strong resilience, increasing openness, and ongoing transformation and upgrading, the nation remains a top destination for foreign investment.

Moreover, according to Lin, who is also dean of the Institute of New Structural Economics at Peking University, China is the largest trading partner for more than 120 economies, and the second-largest trading partner for 70 economies.

As long as the nation maintains dynamic economic expansion and adheres to opening-up, its growth promises opportunities for other economies, he said.

Danfoss Group, one of Denmark's largest industrial enterprises, recently launched new products such as scroll compressors and converters especially designed and optimized to meet the specific needs of Chinese customers.

Earlier this year, the company opened a new application development center in Haiyan, Zhejiang province, to support its climate solution businesses in the Chinese market.

Xu Yang, president of Danfoss China, said that despite disruptions to the company's operations and production caused by the COVID-19 outbreak in Shanghai, it remains confident in the long-term prospects for the Chinese market and is determined to increase investment in the country.

"As the epidemic is being brought under control, and the nation's measures to shore up economic growth take more effect, the Chinese economy is certain to resume its normal growth momentum," Xu said.

Danfoss' confidence in China is based on the nation's pursuit of high-quality development and its commitment to carbon reduction goals, Xu added.

The company focuses on areas such as green and low-carbon technology, electronification, modernization of agriculture, and cold-chain logistics, he said, adding that China has become its second-largest sales market and largest sourcing market.

Poirot, from Air Liquide Group, said that faced with the impact of the pandemic globally, plus uncertainty in the international business community, reshaping the global industrial chain is a complex task.

Lower production costs, along with mature upstream and downstream industrial chains and infrastructure are still the main considerations for corporate investment decisions, he said.

China has been one of the group's top three markets for several years, and the significance of the Chinese market continues to increase, he added.

"The nation will likely continue to lead in manufacturing sectors such as steel, chemicals, photovoltaics, smartphones and cars, while the industrial gas market in China is also growing fast," Poirot added.

Vehicles for export await shipment at Yantai Port, Shandong province, on Sunday. TANG KE/FOR CHINA DAILY

Editing by Wang Qing