Introduction to Economics: Measures of Economic Activity and Impact of Covid-19 on Chinese Economy

This report covers measures of economic activity, the impact of Covid-19 on the Chinese economy, and macroeconomic, fiscal, and monetary policies. It explains how economists measure growth in the economy, how economic policies tackle potential problems, and how to collect and present economic data to assess a country's economic performance.

Introduction to
Economics

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
Explain the different measures of economic activity, particularly of how a nation’s income and cost of
living are measured.................................................................................................................................3
Relate the elements of the theory to every day actual events and explain how economic policies
intend to tackle potential problems........................................................................................................6
Explain a given topic in both macroeconomics by using a clear and concise argument, based on logic
and the underlying theory.......................................................................................................................7
Collect and present economic data in the process of assessing a country’s economic performance......8
CONCLUSION...............................................................................................................................................8
REFERENCES..............................................................................................................................................10

INTRODUCTION
Economics is a complicated social discipline that ranges from arithmetic to sociology and
studies the creation, allocation, and provision of products and services. As a result, economists
are engaged with how a society satisfies its needs during the most essential level. Its most basic
need is to survive, that involves the amount of food, clothing, and shelter (Buckell, Hensher and
Hess, 2021). Following that, it could go on to more sophisticated commodities such as service,
personalized conveyance, entertainment, and so forth. Like a response of the Covid-19
pandemic, China's GDP fell by 6.8% in the first quarterly of 2020. Since China began releasing
GDP data in 1992, this was the biggest single quarterly decrease in production. China's economy
is propelled by "three primary development motors." Consumption expenditure, exports, and
fixed asset investment are the three categories. With the first quarter statistics, all three of such
development sources decreased because of double figures. In this report consist of how the
Covid-19 pandemic affected the Chinese economy.
MAIN BODY
Explain the different measures of economic activity, particularly of how a nation’s income and
cost of living are measured
Economists and statisticians measure growth in the economy using a variety of approaches.
The gross domestic product is a very well and often monitored (GDP). Nevertheless, several
academics have pointed to limits and inefficiencies in the GDP computation throughout time.
Comparative performance criteria are also kept by organizations like the Bureau of Labor
Statistics (BLS) and the Organisation for Economic Co - Operation (OECD) to assess economic
viability. Others argue that increasing the quality of life can be a good way to measure growth in
the economy; however this can be hard to ascertain.
Agriculture, forestry, livestock farming, and fishery make for around 10% of China's GDP,
making it the nation's biggest agricultural sector. Agriculture accounts for around 1% of GDP in
industrialized nations like the US, the UK, and Japan (Zhang and Managi, 2020). After the
United States, China is the fastest growing economy. Whereas a number of economic statistics
are available, the quickly changing economy is difficult to comprehend and analyses, lacks

clarity, and left scientists, researchers, financiers, and speculators shaking their heads. In an
appearance with Bloomberg Television, legendary fixed-income wealth manager Bill Gross
referred to China as "the ground beef of emerging economies."
GDP: Since 1978, when Deng Xiaoping opened China to capitalism economic liberalization and
shifted the country away from a command economy, the Chinese economy has seen remarkable
transformation and growth. From 1983 and 2013, China's GDP increased at an average rate rate
of 10.12%, earning it the country's second GDP. Three major areas or businesses contributes to
China's GDP: basic industries (agricultural), secondary business (building and manufacture), and
secondary industry (services) (the service sector). Main industry contributed for 10% of GDP in
2013, whereas secondary industry represented for 44% and tertiary business contributed for 46%,
according to 2013 statistics (Orrell, 2020).
GDP Last Range
GDP Growth Rate (%) 1.3 -9.3 : 10.1
GDP Annual Growth Rate (%) 7.9 -6.8 : 18.3
GDP (USD Billion) 14723 47.21 : 14723
Gross National Product (CNY HML) 1009151 679 : 1009151

Cost of living: As vast sections of the nation were thrown on quarantine in late January and early
February to prevent the transmission of the infection, China's three primary motors for
development, private consumption, exporters, and capital equipment development, all stuttered.
Last quarter, consumer spending fell 19 percent, whereas imports dropped more than 13%.
Investment fell by 16 percent.
The National Bureau of Statistics (NBS) stated on Thursday that China's GDP expanded 7.9%
from April to June. The lower-than-expected growth rate of 8.1 percent prompted major Western
news agencies to throw doubt on the country's second industry, with some predicting it will
decline more in the months that followed and will be unable to contend with the US economic
system (Christersdotter, 2020).

Relate the elements of the theory to every day actual events and explain how economic policies
intend to tackle potential problems
The government began progressively removing movement and behavior limitations in mid-
February 2020, prioritizing critical sectors, particular businesses, localities, and minority
populations related to continuous risk assessments. The majority of companies and institutions
have returned across the country, but social separation measures stay in force at the local scale,
and foreign entrance is limited to keep importation infections contained. In new locations,
localized mobility limitations were re-imposed, although they were later removed. To track the
virus's progress and limit epidemics, diagnostics and customized health QR codes are utilized.
Even during 2021 Lunar New Year vacation; the government urged people to travel less between
cities while enforcing thorough testing and quarantined regulations (Tyner and Rice, 2020).
During the early-2020 shutdown, the market started a V-shaped rebound that resulted in 2.3
percent per year on average in 2020. Reduced consecutive development in the first quarter of
2021 was more in keeping with China's pre-crisis rate, with the robust year-on-year expansion of
18.3 percent primarily representing the baseline impact from the huge decline in 2020 Q1.
Since the outbreak of the corona virus in Wuhan was made public, the Chinese government
has sought to provide “significant and directed” economic assistance to enterprises, families, and
enterprises. In a March review of China's actions, Chicago Booth's Zhiguo He and Tsinghua
University's Bibo Liu argue that this help has concentrated primarily on firms manufacturing
necessary components for the globe to manage with the epidemic. According to He and Liu,
China's efforts to boost flexibility, promote debt and equity capital, and decrease taxes and fees
have probably kept small and medium - sized businesses afloat, employees engaged, and
emergency aid and other essentials in operation. Despite this, they add, the initiatives haven't
been ready to fully alleviate the suffering. China allowed banks to increase lending or roll over
debt with punishment or low credit reports to aid businesses and people with flexibility. It
loosened the restrictions for lenders who use company shares as security, essentially lowering
reserve requirements because these lenders aren't compelled to sell stocks at low prices
(Streletskaya and et.al, 2020).

Explain a given topic in both macroeconomics by using a clear and concise argument, based on
logic and the underlying theory.
Fiscal: RMB 4.9 trillion (or 4.7 percent of GDP) in fiscal stimulus activities have been
scheduled, including RMB 4.2 trillion projected to be implemented by 2020. From among major
measures are increased spending on epidemics treatment and control, (ii) pharmaceutical product
production, (iii) quicker workers' compensation payouts and extensions to migrant workers, (iv)
tax breaks and cancelled social security benefits, and (v) increased infrastructure spending.
Through automatic stabilizers, extra funding is boosted further still. The government's total aid is
expected to be more substantial. As example, RMB 400 billion (0.4 percent of GDP) in
additional guarantees for SMEs and RMB 900 billion (0.9 percent of GDP) in cost and duty
decreases for products like motorways, aviation, and electricity are included in foreign financial
support (Nguyen-Le, Shin and Little, 2020).
Monetary and macro financial: The PBC assisted with financial regulation and sought to
protect financial sector stability. Key measures include: I asset purchases (opposite sources.list
and moderate credit lines) to recapitalize banks into the financial system; (ii) RMB 1.8 trillion in
re-lending and re-discounting infrastructure to support automakers of essential aid and basic
needs, micro, tiny, and moderate businesses, and the agriculture industry (phased out by end-
2020); and (iii) RMB 1.8 trillion in re-lending and re-discounting amenities to (re-discounting
facility), (iii) a 30 basis point cut in the 7-day and 14-day reverse repo rates, as well as the 1-year
moderate loaning institution (MLF) rate and focused MLF rate, which includes both; (iv)
targeted RRR cuts of 50-100 basis points for medium and large financial institutions that meet
all-encompassing funding requirements that benefit micro- and small-sized enterprises (MSEs),
with an additional 100 basis point reduction for able-to-qualify joint-stock companies (RMB 350
billion) and micro- and small-sized enterprises (MSEs) (vii) the arrival of new mechanisms to
boost lending to MSEs, notably as an RMB 400 billion zero-interest "funding-for-lending" plan
to finance 40% of new unsecured debt from financial institutions and incentivize them to prolong
payment vacations for qualifying loans by subsidizing 1% of loan concepts (RMB 40 billion).
Exchange rate and balance of payments: The currency rate has been given the freedom to
fluctuate. In the trading activity band's core parity creation, the neutralize adjustment element
was taken out. The FX advance system capacity was decreased to zero. In March, the

macroeconomic assessment method boosted the bridge financing cap for banking firms and
businesses by 25%, but then decreased it to the innovative stage for banking firms in December
and companies in January 2021. Foreign fund managers' investment quotas (QFII and RQFII)
were withdrawn, and new quotas for local fund managers were issued. In January 2021, the
macro - prudential correction factor for domestic companies' foreign loan was increased in
recent, resulting in greater limit. Starting June 15, the FX required reserve ratio for banking firms
will be increased from 5% to 7% (Patel, 2020).
Collect and present economic data in the process of assessing a country’s economic performance
According to official figures released Friday, the world's second largest economy dropped
6.8% in the first quarter of 2020 compared to the same period the previous year. This is
somewhat less than the 693 billion yuan ($98 billion) in lost output predicted by Refinitiv's poll
of analysts. While a recession was predicted, China is nevertheless experiencing a special event.
China's drop is the worst in a particular quarter because the country began reporting such data in
1992. It's also the first time China's economy has shrunk since Mao Zedong's death in 1976,
which sealed the fate of a period of socioeconomic turmoil. That same year, the GDP shrank by
1.6 percent (Mohsin and et.al, 2021).
The survey also projected that the average interest rates will remain unchanged until the
end of 2021. Since October 2015, the PBOC has held it at 1.5 percent. As per survey,
inflationary pressures would likely decrease to 1.5 percent in 2021 from 2.5 percent in 2020,
although it might climb up to 2.3 percent in 2022. China's GDP growth is expected to peak 8.5
percent in 2021, before falling to 5.4 percent in 2022, according to a World Bank projection
issued in June. As per National Bureau of Statistics, median second-quarter development in 2020
and 2021 was 5.5 percent, slightly increase from a 5 percent mean in the first period. The NBS
reported that GDP increased 1.3 percent on a regular schedule in April-June, narrowly surpassing
estimates of 1.2 percent growth (Raimo and et.al, 2020).
CONCLUSION
As per the above report it has been concluded that The Chinese current attempts will not be
enough to avert suffering, which is a reality that countries all over the world must acknowledge.
According to the experts, “Chinese companies are essentially paralysed,” and industrial value
added fell by 26% in February as employment soared. The problem stems in part from China's

place in the global economic. Even if the COVID-19 epidemic is limited in China, as the
government has declared, the nation's open and market economy makes it particularly sensitive
to how effectively the rest of the globe handles the pandemic. China might be hit especially hard
if the global slump outpaces the reserves of Chinese businesses and consumers.

REFERENCES
Books and Journal
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Zhang, D. and Managi, S., 2020. Financial development, natural disasters, and economics of the
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Orrell, D., 2020. The value of value: A quantum approach to economics, security and
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Christersdotter, M., 2020. Transformers: Hip hotels and the cultural economics of aura-
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Mohsin, M. and et.al, 2021. The evaluation of efficiency and value addition of IFRS
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Raimo, N. and et.al, 2020. The role of ownership structure in integrated reporting
policies. Business Strategy and the Environment. 29(6). pp.2238-2250.