Coronavirus: 95% of Chinese companies return to work. Beijing plans major projects
95% of large companies outside Hubei have reopened, 60% of small and medium-sized ones. Spending on 5G infrastructures and networks to stimulate the economy. Structural reforms are needed for economists. Favor migrant workers to increase consumption.
Beijing (AsiaNews / Agencies) - China's deputy minister for industry, Xin Guobin, said today that 95% of large companies outside Hubei province have resumed operations. The reopening rate for small and medium-sized industry is 60%.
The Beijing government is committed to bringing production back to pre-coronavirus levels. Most analysts predict a sharp slowdown in GDP in 2020, with high chances of a contraction in the first quarter of the year - the first time since the end of the Cultural Revolution in 1976.
Xin announced plans to build ultrafast internet (5G) networks and other infrastructure projects. This is President Xi Jinping's treatment, which focuses on spending on large infrastructure - in particular new high-speed rail routes - to stimulate the country's economy, retracing what has been done in the recent past. To overcome the 2008 mortgage crisis, China launched a construction program to the tune of 4000 billion yuan (512 billion euros).
According to a group of government economic advisors it is a risky policy given teh current economic climate. The 2008 stimulus overheated the Chinese economy, resulting in huge debt for local governments. Zhang Bin, senior researcher at the Social Academy of Sciences, says that this is the time for major structural reforms, and that the authorities must work to strengthen consumers' purchasing power.
Consumer spending contributed to 58% of Chinese growth in 2019. The National Statistical Office reported on 11 March that the consumer price index grew 5.2% in February, compared to the same period last year. To increase citizens' spending power, Zhang suggests allowing migrant workers to settle legally in the urban and industrial areas where they are employed. In China, only those who have permanent residence can access basic healthcare and social services. For example, a migrant who needs to be treated is forced to return to the (usually rural) area tehy originate from.