When China went into lockdown economists thought that its growth trajectory would be v-shaped
Gu Changshi’s job is to persuade companies to invest in Lingang, a wind-swept free-trade zone on the edge of Shanghai, abutting the Pacific Ocean. But over the past two months, as China has battled covid-19, his job has been to ensure basic survival, both physical and corporate. First his agency requisitioned two hotels to quarantine anyone coming to Lingang from virus-hit regions. Then it started offering conditional cash grants to beleaguered companies located there.
Reviving growth involves boosting both supply and demand. Officials schooled in Marxist theory, which emphasises production rather than consumption, have naturally turned first to the former, ie, to ensuring that goods are made. The main problem has been a dearth of blue-collar workers, many of whom went to their hometowns for the spring festival just before the lockdown and have not yet returned. Production hubs along the coast have chartered trains and buses to bring them back.
Measures aimed at preventing another surge of covid-19 have added to the complexities of manufacturing in China. The German manager of an optical-wire factory in Jiangsu province has divided his workers into ten separate units to minimise the risk of cross-infections. The units are kept apart from each other in the factory, the canteen and their dormitories. Such measures are necessary but cumbersome, he says.
China can take some solace in the fact that it relies less on exports than it did during the global financial crisis of 2007-09. But domestic consumption is now far more central to the economy than exports ever were, and it is much curtailed. Retail sales plunged, unsurprisingly, when just about everyone was cooped up at home. People now can move more freely, but many still avoid large crowds. Shops and restaurants are quiet.
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