China’s Economy under COVID-19: Short-Term Shocks and Long-Term Changes
2020
Under the impact of the epidemic and policy
responses, China’s economy in 2020 is expected to maintain a “low rebound and
overall soundness”. However, as a major public health event, the long-term
impact of COVID-19 on China’s economy should not be ignored. On the basis of
confirming preventive savings at the micro level, this paper uses the macro
neoclassical economic growth model to point out that COVID-19 epidemic may
promote China’s savings rate to increase the potential output level in the
medium and long term. However, given the continued downturn in the global
economy, a rebound in China’s savings rate may exacerbate the global economic
imbalance. Therefore, the Chinese government needs to make a good plan to
strengthen international cooperation while actively encouraging consumption to
stimulate domestic demand.
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