Mon. Apr 6th, 2020

Foreign Policy Institute

Analysis of world affairs

GLOBAL ECONOMIC IMPACT OF CORONA VIRUS

chinadrop

With a GDP of 14.3 trillion US dollars China is the second largest economy of the world. Its trade volume in 2019 was 4.6 trillion US dollars. These are huge figures that can be expected only from a hard working population of 1.4 billion. Chinese economy has integrated significantly with all possible countries. Almost all countries around the world are buying finished products from Chinese markets. China also supplies any type of intermediate goods for production in different countries. China is also a place where many foreign companies make their production and sell that production in their own countries and all around world. Mobile phone companies, sportswear companies and textile companies are among them. Almost all international food chains have hundreds of stores in China. The most well known companies are Starbucks, McDonalds, Pizza Hut, etc..

With its highly skilled and hard working work force China is producing quickly and at large volumes and at reasonable prices, thats why they are becoming the main seller of the world. China is also sending a lot of tourists to all possible countries of the world and almost 1 of each 5 tourist is from China these days. They spend around 270 billion US dollars each year in foreign countries and that means a big global accelerator for the economies. China is also using a substantial part of world’s energy sources. Shortly it consumes a lot and spends a lot thus giving a great motivation to the global economy.

Corona virus hit China so hard that it is difficult to imagine the economic effects which the world shall face in the following months. Internally China directed all its power to stop the corona virus and we can see that to do that the govenment is taking harsh measures and people could barely leave their homes. The streets are empty in the big cities and most of the people do not go to work. Only a small percentage of restaurants are working and nobody knows about the production lines.

Additionally, being the normal psychology of people there is no doubt that there will be a cancellation of orders from the mainland China for most of the goods. The impact of these facts shall be devestating for Chinese economy. Most probably until the virus lose its fatal status and China convince the world that it is no longer a threat to people, its exports shall not be able to reach the levels of 2019. The tourism of Chinese people shall drop tremendously as several countries are taking precautions to prohibit Chinese people enter their countries. There is no doubt that tourism or business visits to China shall drop substantially too.

Most probably in 2020 China could only reach to the figures of 2010 in all aspects of the economy but also upon convincing the world that it is free of the virus its economy shall boom again and the global economy will shine  by the help of China.

 

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