Official guidance key to economic recovery

By Wang Jiamei Source:Global Times Published: 2020/2/4 23:28:42

Illustration: Luo Xuan/GT

As the coronavirus outbreak has caused serious disruptions to the business and production plans of manufacturers in China, great uncertainty now hangs over the country's manufacturing sector.

The effectiveness of the efforts to curb the spread of 2019-nCoV will, to a large extent, determine when manufacturers can resume their production, but Chinese authorities should also provide the necessary guidance and support to help business resume operations in a timely manner. Meanwhile, foreign companies should be no exception. Various local governments should also try their best to help them resume operation in a proper way.

As a black swan event, the coronavirus is bound to hit the manufacturing sector in China at least in the first quarter. Due to factors like postponed resumption of work and delayed supply of raw materials, industrial production will face some impact in the short term. Moreover, domestic manufacturers will likely see an indirect impact from consumption, services and trade areas, which are expected to see reduced orders.

Overall, the economic impact of the outbreak will be limited and temporary, but the general environment for China's manufacturing sector has changed dramatically over the past few decades. Unlike the SARS outbreak in 2003 when China's manufacturing sector had strong upward momentum, the sector has been under great pressure recently due to the US-China trade war and industrial cycle adjustment, so the impact of the epidemic should not be underestimated.

To pull through this critical time, overall arrangements and guidance from the government will be essential, both in terms of controlling the epidemic and the resumption of production.

First of all, authorities should help companies that are crucial for the national economy and people's lives to resume production in a gradual and safe manner, as long as the outbreak prevention conditions permit. Manufacturers that support medical services, power supply, transportation and communications should also be included as they are an indispensable part of the efforts to fight against the deadly virus.

Second, local governments should offer necessary guidance for the resumption of work by manufacturers based on local developments in the epidemic. If the situation improves in the coming weeks in some areas, production could be allowed to resume.

Third, as some government agencies and local authorities have rolled out supportive policies to help small and medium-sized enterprises overcome the difficulties, it should be noted that foreign manufacturers also deserve the same attention in China. In the fight against the coronavirus outbreak, quite a number of foreign-backed companies have donated medical equipment and other materials to China and have been cooperative in preventing the spread of the virus. They also need relevant guidance and support from the government, which will be important for maintaining confidence in the Chinese economy. Of course, all these efforts are based on the precondition that the epidemic is being contained.

The author is a reporter with the Global Times.

Posted in: GT VOICE

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