The rapid spread of the coronavirus is a tough blow
for a world economy that seemed on the cusp of a modest revival.
The extent of the damage, of course, depends on how soon
and how effectively the outbreak is contained.
Whatever the trajectory of the epidemic,
this is a moment of serious reckoning for China’s economy.
Hard as it is to envision, the world’s second-largest economy
is coming to a near standstill.
Infections and fatalities are mountingship their goods out reliably
Consumption has also been cut drastically, as people mostly stay indoors.
Service industries such as tourism and restaurants are being hit especially hard.
Companies in this sector, as well as small manufacturers,
have been driving China’s employment growth, but they tend to have little financial cushion.
Beijing does have room to increase public spending, cut taxes
and provide cheap credit to bolster growth. China’s central bank
In any event, none of these measures will have much impact
until commercial activity picks up.
Moreover, China’s traditional banking system has been much better
at funneling credit to large, state-owned enterprises
rather than to the struggling smaller private companies.
China’s sheer size, along with its roles as an engine of global economic growth
and a dominant player in commodity markets, means that a hit to China will have significant ramifications all over the world.
Oil prices have tumbled as China’s growth prospects weaken
and international travel, particularly to and from China
This episode will also add momentum to some changes
in global supply chains that were already underway.
Along with Chinese workers’ rising wages and
the prospects of further U.S.-China trade tensions,
the epidemic is likely to cause multinational companies
to reassess their supply chains and reduce their production footprints in China.
The coronavirus epidemic might have only a limited immediate impact on the U.S. economy, but by creating further uncertainty and disrupting supply chains in Asia,
it will add to the long list of factors likely to hold back U.S. and global growth in 2020.
The temporary boost in business sentiment and investment that could have been expected
from the U.S.-China trade deal last month is going to be offset
by this new cloud of uncertainty over global trade.
A worldwide recession is not yet on the cards but, at a minimum, the added uncertainty will restrain investment and productivity, which already looked anemic
Another long-lasting impact is likely to be on Chinese citizens’ confidence
in their own government. The state and its people seem to have made an implicit bargain:
good economic performance, higher living standards and the semblance of social stability in exchange for constraints on free expression, democratic rights and the free flow of information.
Yet even in an environment where it is accepted that the authorities will control what information is made public, the public grows skeptical about the competence of a government that systematically hides bad news. This issue is especially pertinent in the context of the Chinese government’s initial attempts to play down the outbreak of swine flu last year.
By the time the government admitted to the scale of the problem,
China’s pig herds had been decimated
Now, coronavirus is spreading fast in a country that was already experiencing a slowdown from the swine flu and an outbreak of avian flu
The way the coronavirus epidemic is playing out might have lessons not just for China’s government but perhaps for the United States as well. Once trust in the government and a free press are eroded by the government’s desire to manipulate information, the costs can be great — especially in difficult times,
when that trust becomes crucial for maintaining confidence and stability.
If history is any guide, the coronavirus will eventually come under control and
the Chinese and world economies will get back on track, perhaps after a painful period.
It is the effects on how people and businesses perceive their governments that might prove to be longer lasting.
Eswar Prasad is a professor at Cornell University and a senior fellow at the Brookings Institution.
첫댓글 문재인 정권은 아직도 늦지 않고,
기회가 있다.
6.25 전쟁에 쳐내려온
중국공산당이 무너지면,
한국의 밝은 미래발전이 확실하다.
미국 트럼프의 기본적인 전략은
중국의 공산주의 패권을 저지하고,
이슬람교의 인권유린을 막는것을 기본전술방향이다
친중과 친북을 중지하고,
한미일 동맹을 강화하여
미국에 더 많은 교역수출을 하여
대한민국 경제 성장을 하여야한다.
포플리즘의 선심돈을 마구써서
엄청난 국가부채을 지지말고,
제 4차 산업에 투자하여,
젊은 이들에게 일자리와
미래발전을 제시하여야한다.