The impact of the outbreak may be stronger than during the subprime crisis. At present, China is still plagued by imported cases, but after nearly two months of hard combat, the new coronal outbreak has been significantly controlled. By contrast, the outbreak is spreading rapidly to more than a hundred countries and regions, and each country responds differently. The intertwining of industrial chains in the context of globalization makes the impact of this outbreak more complex than ever before. There are plenty of signs that the impact of this outbreak on the global economy may be comparable to the subprime crisis. The global PMI has hit a near 10-year low, and the Federal Reserve’s extraordinary emergency interest rate cut also bodes well for the potential intensity of the outbreak. China’s various industries this impact or stronger than the subprime crisis period, and the sub-prime crisis hit the most serious period, the first quarter of this year, China’s industry revenue generaldecline seems to be greater.
The first step in economic recovery is to resume production. At present, the resumption of work in an orderly manner but the progress is still slow, most industries are insufficient. The main reasons at this stage are the lack of subjective motivation and the influence of administrative control. In recent years, China’s economic structure has undergone important changes, the proportion of foreign trade and investment has decreased significantly, and the proportion of consumption has increased significantly. In the subprime crisis period can be pulled consumption to affect the economy, but at this stage of high household debt, consumption recovery or more difficult. In the United States, for example, there were two outbreaks in the last century: Asian influenza and Hong Kong flu, after which, constrained by factors such as lagging unemployment and low consumer willingness, the pace of consumption recovery was lower than the pace of GDP, and several u.S. economies emerged from the outbreak mainly driven by government investment. Recall that China came out of the shock in 2009, mainly relying on investment efforts out of the crisis, focusing on infrastructure, manufacturing, real estate and other industries.
Infrastructure has been the main force in the recovery of investment. One of the problems that plagues China’s economy in recent years is that small and medium-sized enterprises are difficult to finance expensive, in the current special period, government investment is very critical, by state-owned enterprises to pull investment first, how to lead infrastructure is also very critical. In the past few years, supply-side reform has been the main theme, with so-dconstraintonal investment constrained by leverage of state-owned enterprises. The new infrastructure now mentioned, including 5G, artificial intelligence, the Internet of Things, charging piles, and so on, is more like a new industry. Whether new infrastructure can replace old infrastructure to boost the economy remains to be seen. Private enterprises are in a difficult situation, financing problems are still prominent, has been in the history of the most difficult period.
Compared with the subprime crisis, the overall demand policy response space in many economies has narrowed significantly. Monetary policy, the subprime crisis period of the United States and the euro zone policy interest rates are still 4% or more, Japan’s policy interest rates are also positive, but the current European and Japanese policy interest rates have been zero or even negative interest rates for many years, the U.S. policy rate has repeatedly declined and zero interest rates have been relatively small distance. Bond yields in a growing number of economies have reached the unconventional state of zero and negative interest rates. If central banks in major economies continue to pursue quantitative easing, the effect may also be marginal. China has a clear role in driving the global economy, China’s economic recovery, the world economy will recover. In the current globalization of the significantly increased degree, the deep integration of the industrial chain of various countries, Japan, South Korea and other important manufacturing countries in the world have been affected by the virus, of which the electronic communications industry will be the impact of the epidemic on China will be the largest, China’s current fiscal and monetary policy stimulus is much lower than the SARS period, in order to economic recovery, or moderate expansion, Larger fiscal deficits are expected.