The novel coronavirus disease 2019 (COVID-19) has become a global pandemic with serious economic and social consequences. For countries around the world, it is important to restore their economies through fiscal and monetary policies to boost small- and medium-sized enterprises (SMEs) and ensure stable employment amid efforts to contain the epidemic, according to the second online seminar of the Boao Forum for Asia (BFA) on COVID-19 and global economy on March 25. International experts from economies such as the United States, the European Union and China attended the seminar.
As Bloomberg Global Chief Economist Tom Orlik highlighted, the impact on the global economy can be calibrated from the contraction in retail sales and industrial production of China in the first two months. Countries including China, the Republic of Korea and Italy are expected to see economic slowdown in the first quarter of this year and the United States is likely to bear the brunt in the second quarter. However, he believed that fiscal stimulus policies launched by the countries are enough to offset the impacts in the second half of this year.
"Facing the threat of recurrence of the virus, countries still need to think beyond the issue to balance the epidemic containment and economic recovery," Joerg Wuttke, President of the European Union Chamber of Commerce in China, said.
According to Wang Xin, Secretary General of the China Society of Banking and Finance, the global economic turbulence is mainly caused by the lack of confidence amid economic recession. International cooperation and coordination are quite important for addressing the problems.
Despite the recent contraction in some sectors, many attendees expressed optimistic outlooks for China's economy. As Wang suggested, China is strongly backed by its fiscal and financial policies, a large market, a wide range of industrial sectors and booming online businesses.
Craig Allen, President of the U.S.-China Business Council, stressed that the smooth implementation of the China-U.S. phase-one trade deal which covers key issues including agriculture, financial services and intellectual property rights is expected to be a silver lining for the Chinese economy. "I firmly believe that it will help drive the private sector in China and contribute to China's future economic growth," he said.
To boost domestic sectors affected by the epidemic and create new growth drivers, China has introduced a slew of monetary and fiscal policies to support domestic and foreign-funded enterprises, especially the SMEs, to resume work. It has also proposed new infrastructure projects which refer to digital facilities such as 5G base stations, vehicle charging stations, big data centers, artificial intelligence and industrial Internet.
Wuttke told the seminar that multinationals in China have benefited from the policies, and the country is expected to introduce more measures for cutting taxes and easing administrative restrictions.
As Wang cautioned, China also needs to keep a close eye on the side-effects of cross-border capital flow and the accumulation of asset bubbles caused by too much liquidity.
Besides launching effective monetary and fiscal policies, China needs to further ease the burden on enterprises by cutting social security contributions and focus on improving social welfare and public health, Zhu Ning, a professor with Shanghai Advanced Institute of Finance, told the gathering.
The BFA is an international organization jointly initiated by 29 member states. The BFA holds its annual conference in Boao, Hainan, south China on a regular basis. Its mission is to pool positive energy for the development of Asia and the world.
Copyedited by Madhusudan Chaubey
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