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NANCHIN – The great Chinese escape from the economic crisis triggered by the coronavirus is accelerating. GDP in the third quarter increased by 4.9% on an annual basis, almost reaching the pace of 2019, which was 6.1%. After the red collapse of -6.8% in the January-March period, with all of China in lockdown, the second economy in the world had a first rebound in the second quarter, ending in June with a + 3.2%: but then it was enough to restart the assembly lines to obtain the result. Now for this 4.9% year on year he says that China’s GDP is growing in a real way, supported not only by production but also by purchases and the services sector (at the beginning of October 600 million Chinese went on vacation for a week). Beijing’s is the only expanding economy among the G-20 countries. The International Monetary Fund predicts that the final figure for 2020 will be around + 2% and that China will account for 30 percent of global growth.
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Beijing has given various tests to the world in recent months: its Party-State system proved unprepared and even reticent at the beginning of the epidemic which later became a pandemic; at the end of January it reacted with the largest quarantine operation in history: 60 million people locked up in their homes between Wuhan and its province of Hubei; then from February to early April it stopped transport, factories, and services that were not strictly essential throughout the country. The recovery in the spring was very cautious: immediately the factories, easier to equip to the new health safety requirements. Even the schools, for which the Chinese have a great deal of attention, were only reopened at the end of the summer.
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After the gigantic lockdown, the Party-State has refined its strategy: to break down the transmission of the coronavirus it has resorted to Targeted closures of small towns and entire neighborhoods when an outbreak broke out in Beijing in June. And a massive swab campaign was added to the localized lockdown: one million people a day in Beijing in June; 11 million in 5 days in Qingdao last week. The people responded well, lining up neatly: the feeling that the Party-State once again managed to make people forget the mistakes of Wuhan between December and early January. Expensive operations, but the numbers provided by the authorities for weeks say that the coronavirus with this shock therapy has been brought under control.
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Now the data on GDP and other indicators say that the economy of an industrial power can recover from the horse treatment to bring down the coronavirus. Chinese exports and imports both grew impressively in September (9.9% and 13.2% respectively), compared to the same period of 2019 and this is a good sign for the globalized world. If Chinese domestic consumption rises, it makes sense to keep Italian factories specialized in exports open. But the serious unknown remains of the second wave of coronavirus in Europe, which can restart the spiral of depression: if the consumption of Westerners forced to stay at home stops again, the Chinese export car, which still accounts for 17% of GDP, also suffers.
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Xi Jinping engaged for months in a campaign with an autarchic tone, which it pushes the Chinese to consume more to support production, without having to rely too much on the foreign market (uncertain not only for the coronavirus but also for the impact of the clash with the United States, which will not pass even if the Trump presidency ends).
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To run away from the recession, there are massive new public investments in major works. In August it was decided that China’s high-speed rail network will double by 2035, reaching 70,000 kilometers. China already has 36,000 kilometers of high-speed rail network, the largest in the world, about two-thirds of the global one (the United States actually gave up in the 1950s to modernize their rail system, to privilege the highways that supported the automotive and oil industries and then focusing on air traffic for medium and long distances). The Chinese boom in high-speed rail began in 2008: large infrastructures to escape the tunnel of the financial crisis. Now China’s economic planners have decided that within 15 years, another 34,000 kilometers of network will be built to reach 70,000 km in 2035.
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By 2035, the Party has promised that China will be a modern socialist country. Already in the first half of 2020, Beijing’s investments in railways grew by 1.2%, to $ 46 billion, compared with a general decline of 3.1% due to the coronavirus lockdown. There will be 200,000 kilometers of track in 2035, compared to 141,000 today, and of these, 70,000 will allow convoys to exceed 250 km per hour on average. The Fuxing Beijing Shanghai reaches 350 km. And plans are already being made to reach 400 km and even 600 km, with the maglev tested at the end of June.
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The railways are the tank of Xi Jinping’s project to escape the attempted economic and technological encirclement and isolation of the United States. The CCP secretary general in a series of speeches in recent weeks has exposed one new initiative for dual circulation of the economy: internal circulation which must focus on Chinese consumption and the financial markets of Shanghai and Shenzhen as pillars of growth.
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High speed is not only a medium-term stimulus to revive growth, but a long-term strategy to create a solid Chinese market. The new Tav convoys were named Fuxing, which means Rejuvenation: Fuxing one of Xi’s great slogans for the People’s Republic of China. The first generation trains, which entered service in 2008 when Hu Jintao was president, were called Hexie, which means Harmony. The new supreme leader has wider ambitions, he has abandoned the old teaching of Deng Xiaoping which urged to hide the Chinese strength to buy time.
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The strategic clash that broke out with the United States was sparked by Xi’s new line. In Washington they point out that spending on infrastructure creates debt and many economists are always convinced that Chinese growth is a colossus with feet of clay. But theEconomist gave a different assessment. Xi is reinventing state capitalism. Don’t underestimate it, the liberal weekly suggested in an editorial. And he noted that the Chinese economy was damaged by Trump’s tariff war less than expected. And it was even more reactive in the face of the pandemic: the International Monetary Fund predicts that US GDP will fall by 8% in this dose horribilis.
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Xinomics works right now. Even if the trial by fire will come in time, when the rest of the world has managed to defeat Covid-19 and it will be seen if Beijing’s centralized planning can really support innovation. The Economist concludes that “history suggests that a broad and widespread decision-making process, freedom of speech and open borders are the magic ingredients.” And in the short term, we need to see what will also happen in China on the coronavirus front. Although here the system designed for the continuous control of citizens and their activities.
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19 October 2020 (change October 19, 2020 | 10:18)
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