China's Economy and COVID-19 Impact: AAF010-1 Economics Assessment

This report provides an overview of China's economic performance, particularly focusing on the impact of the COVID-19 pandemic. It examines various measures of economic activity, including GDP and PMI, and relates economic theories to real-world events, such as government policies implemented to address potential problems caused by the pandemic. The report also presents economic data to assess China's economic performance, highlighting the country's recovery and future prospects. The analysis incorporates macroeconomic perspectives, discussing policy adjustments and shifts in consumer spending. The report concludes that China's economy has shown resilience, but ongoing uncertainties require flexible policy responses.

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........................................................................................................5
Explain a given topic in both macroeconomics by using a clear and concise argument, based on logic
and the underlying theory.......................................................................................................................6
Collect and present economic data in the process of assessing a country’s economic performance......7
CONCLUSION...............................................................................................................................................8
REFERENCES..............................................................................................................................................10

INTRODUCTION
Managerial economics is a branch of development studies that focuses on using the
theoretical concepts of microeconomic theory to solve business issues and make decisions. It's a
specialist field that uses multiple economic theories to handle with a company's inner difficulties.
Any firm must have a strong economic component. This singular notion serves as the foundation
for all organizational expectations, forecasts, and expenditures. In an essence, it is the definition
of management economics. COVID-19, an illness produced by the new corona virus SARS-
CoV-2, has had a significant impact on global money system, governments, and communities
(Cabrera and Fricke, 2021). The effects of COVID-19 on the Chinese economy, China's national
policies to this surprise, such like fiscal, macroeconomic, and organizational initiatives, and
considerations like the structure, benefits, and consequences of China's policy actions are all
examined in this research. This research also looks towards issues that would need to be given
more attention. This study provides relevant and essential recommendations to politicians and
businessmen throughout the world, given the significance of China in the world in terms of its
economic, impact on global development, and full - length boost.
MAIN BODY
Explain the different measures of economic activity, particularly of how a nation’s income and
cost of living are measured
The PMI is often used to gauge economic development in different businesses, using a 50
percent development and contract border. A score of more than 50% suggests that the economy
is booming; a score with less than 50% suggests that the economy is declining; a score with less
than 40% implies that the growth is in a depressed state; a score of mildly more than 50%
demonstrates that the world is gradually shifting forward; a score of fractionally less than 50%
implies that the growth is gradually creeping against downturn; a score of mildly more than 50%
implies that the growth is gradually creeping forward into downturn; and a score of a little just
under 50% implies that the financial system is The overall PMI production index for February
2020 was 28.9%, down 24.1 percent from January, according to the National Bureau of Statistics
(Małecka, 2021).

Economic growth: Overall, growth in 2021 should be solid, with better exports, personal
investment, and manufacturing output than last year. Regarding the gov't's negligible policy,
more internal Covid-19 epidemics remain a significant danger, while strained ties with the West,
expand the reach government debt, and regulatory tightening significantly darken the picture.
GDP is expected to grow by 8.5 percent in 2021, according to FocusEconomics, which really is
down 0.1 percentage points from last month's forecast. GDP is expected to grow by 5.5 percent
in 2022, according to the committee.
Gross domestic product: China's economy grew faster than predicted in the first quarter of this
year, placing it on track to join the United States as large engines for economic recovery in 2021.
The economy has been growing 18.3% during the first quarter compared to the same period a
year ago, pretty much in line with the 18.5 percent anticipated by economic experts in a
Bloomberg poll, though the career high estimate was due largely to similarities with a year prior
when so much of the economic system was shut down due to the corona virus (Kim and et.al,
2021).
The new data shows that China is on track to exceed its annual growth objective of
further than 6%, bolstering predictions that China and the United States, wherein experts
estimate 6.2 percent growth, would outpace other advanced economies this year. Following
being the first global superpower to limit the spread of the coronavirus and restore to
development, China's resurgence hasn't yet reached a halt, with GDP increasing by 0.6 percent in
the first three months of 2021 over the past period.

Relate the elements of the theory to every day actual events and explain how economic policies
intend to tackle potential problems
The government has also taken a number of actions to keep economic position from
worsening further, notably extending a period of calibrated tolerance to help impacted people,
businesses, and regions with repayment issues. Key indicators are including I important to
encourage borrowing to SMEs, such as assisting unsecured debt SME loans from financial
institutions, trying to raise the objective for big institutions' lending expansion to MSEs from
30% to 40%, and constructing an assessment method for banks' lending to MSEs, (ii) deferring
student loans until the end of 2021, and easing loan size limits for online debts. (iii) enhanced
total participation for credit assurances, (iv) assistance initiative encourages by banking firms to
funding SME lending, (v) external funding endorse for banks and corporations via enhanced
bond issuance by corporate entities, such as comforting rules on insurance companies for debt
securities, (vi) versatility in the application of credit assurances (Puaschunder, 2021).
Further than this year's resurgence, authorities should focus their efforts on encouraging
economic expansion massive reforms and directing the industry into a more sustainable, robust,

and equitable growth trajectory. Reforms that are working effectively are required to achieve
stronger growth:
To begin, more fair taxes combined with better social safety nets would aid in reducing
excessive income disparity and enhancing consumer expenditure.
Second, a greater use of carbon taxes combined with more green investment may hasten
China's planned development of low growth, in accordance with the country's long-term goal of
decarburization by 2060.
Third, continuous liberalization of home industries, such as by lowering the restrictive
listing for private sector investment, as well as efforts to reduce inefficiencies in market
mechanisms, such as the financial sector, would enhance distribution of resources, enhance
competitiveness, and drive innovation (Díaz and Pérez, 2021).
A concerted effort in this approach under China's 14th Five-Year Plan (FYP) would boost
productive capacity, resulting in more equitable, consumer-driven, and ecologically sustained
development.
Explain a given topic in both macroeconomics by using a clear and concise argument, based on
logic and the underlying theory.
1. Due to the ongoing uncertainties, the policymakers will need to remain flexible and
modify the degree and mix of macroeconomic assistance on a regular basis.
Macroeconomic policies are likely to move from accommodating to more neutral as
China's recovery progresses. The speed of policy normalization, on the other hand,
should remain data-driven and adjusted to the depth of China's and the world's economy.
2. Monetary policy normalization should be done slowly until inflation rises substantially
beyond goal and inflationary expectations become unmetered (Cordero, Polo and Salinas-
Jiménez, 2021).
3. Greater business borrowing and overheated real estate market pose financial stability
concerns that must be constantly managed. In the short to midterm, expand the reach
bankruptcies may generate price fluctuations, but in the long run, risk prices will
strengthen. A stronger corporate restructuring system would make it easier for weak or
failing businesses to depart in a controlled manner, allowing assets to move to more

useful activities. Conversely, a thorough structure for dealing with financial institutions
being unable to fulfill financing needs is essential for non-viable institutions to depart
avoid causing spread across the financial sector.
4. In terms of fiscal policy, China has policy flexibility at the national level, and authorities
should be prepared to sustain fiscal assistance if domestic prices remain weak and foreign
deficits worsen. Increasing fiscal expenditure on welfare spending and green
development but instead of traditional road construction will not only assist stabilize the
rebound and boost quick consumption, but also assist to China's desired moderate
rebalance.
5. The composition of consumer spending is likely to continue to shift toward private
household consumption as the economy deepens. The continued job market rebound,
higher household earnings, and increasing customer sentiment are expected to help real
demand growth progressively revert to its pre-COVID-19 pattern. Investments will
continue to drive development, but as industrial expenditure increases, it is likely to move
towards private sector investment, countering decreasing infrastructural and residential
funding. Export growth is likely to maintain manufacturing capability utilization strong in
the immediate term as the worldwide economy gains traction (Alshater, Atayah and
Khan, 2021).
Collect and present economic data in the process of assessing a country’s economic performance
Nonetheless, the data show that China's economy is still growing. When contrasting the last
quarter of 2018 to the last quarter of 2020, the Chinese GDP expanded by only 0.6 percent.
Because of epidemic, the economy has largely recovered and aided by stringent virus control
legislation and temporary corporate assistance. Following a disastrous start to the year, China
was the only major economy to expand in 2020, albeit at its slowest pace in generations, with 2.3
percentage points. China has established a 6% economic growth target for 2021, after
abandoning its previous objective last year (Bacchetta and Van Wincoop, 2021).
China's National Bureau of Statistics, which issued the first quarterly figures, stated, "The
country's economy got off to a solid start." "We must be mindful that the Covid-19 outbreak is
still growing internationally, and the global environment is compounded by significant
uncertainties and volatility," the statement continued. Other major indicators provided by China's

statistical office also hint to a continued recovery, although they are particularly robust when
contrasted to last year's severely low levels. Factory production increased by 14.1 percent in
March compared to the same month last year, whereas retailing sales increased by 34.2 percent.
It's the greatest increase in gross domestic product (GDP) since China began recording quarterly
data in 1992. Meanwhile, the results released on Friday fell short of forecasts, with experts
polled by Reuters anticipating 19 percent growth. In comparison to last year's massive economic
decline, they are also involves substantial and less predictive of robust growth. China's GDP
dropped 6.8% in the first early 2020 as a result of national lockdowns during the height of the
Covid-19 epidemic (Caçador, Dias and Godinho, 2021).
Ultimately, the pandemic will have a short-term impact on China's economy. Retail sales
of socially consumer items decreased 20.5 percent each year in nominal terms (a 23.7 percent
decline in real values after subtracting price variables) in the first two months of this year, while
fixed asset development (including farming dwellers) fell 24.5 percent year after year.
Considering the impact of the pandemic on many aspects of life, China's economy seems to be
on a lengthy development path, thus according data issued by the National Bureau of Statistics
on March 23. On the one hand, the key highlights of productivity, market forces, importation,
investments, and so on from January to February represent for a tiny percentage of the total
number for the entire year owing to the Festival Season, climate, and other factors. However,
since the second half of the year stands for 55 percent of total commercial quantity, the first part
of the year stands for 45 percent, and the very first quarterly stands for just around 20 percent,
the first quarter counts only for about 20 % of total commercial quantity (Verme and Schuettler,
2021).
CONCLUSION
As per the above report it has been concluded that The COVID-19 outbreak broke out in
China right before the Spring Festival, the world's greatest population migration. In such a
circumstance, China has adopted a number of unique steps to prevent the virus from spreading.
In mainland China, the number of newly diagnosed cases each day has fallen to a handful or
even zero. Other countries, on the other hand, are still dealing with significant problems. Given
the growing severity of the COVID-19 pandemic, we conducted this study to describe the actions

taken in China, as well as the overall effect of the practises on SARS-CoV-2 dissemination, in
the hopes of assisting others fighting the disease outbreak.

REFERENCES
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