Uneven Post-Pandemic Recovery Amongst China’s Mainland Economies

Despite the global economic decline that was experienced in 2020 due to the COVID-19 pandemic, China saw positive overall economic growth. However, it is seen that there are uneven rates of recovery between sub-national economies, especially pertaining to the secondary and tertiary sectors. Like most countries, China too had resorted to pandemic control policy measures such as lockdowns and social distancing measures to curb the spread of the virus. Disparate policy approaches amongst the economies, owed to government responses and the severity of the virus spread, led to uneven impacts between economies. This serves to be a fascinating case study and leads to the understanding of the public policy successes and failures in light of China’s post-pandemic recovery.  

The recent paper by ACI, titled ‘From Shock to Recovery: Macroeconomic Performances of Chinese Provinces under the COVID‐19 Crisis’ examines the COVID-19 impact on China’s secondary and tertiary sectors at the provincial level from Q4 2019 to Q4 2020. While the regional GDP in all the 26 provinces studied demonstrated a recovery in Q2 2020, the sectoral provinces told a different story, portraying uneven recovery patterns through the quarters.

ACI’s research uses indicators to assess the sectoral effects on the provinces. Most of the indicators such as industrial enterprise total profit, investment in real estate, passenger transport by road, and number of delivered parcels demonstrate a V-shape curve. Others such as insurance premium shows an inverted V-shape. These trends are indicative of the varying levels of resilience and speed of recovery amongst the 26 provinces.

The paper also includes performance rankings of the 26 economies. Looking at the results, five economies exhibited significant fluctuations, defined as a shift of more than six places either way in the rankings. These are Beijing, Chongqing, Hainan, Inner Mongolia, and Jiangxi. However, other economies demonstrated more stability throughout the year. Anhui, Guangdong, Guizhou, Jiangsu, Shandong, Shanghai, Tianjin and Zhejiang consistently performed above average and had position changes of less than four places. Overall, the economies demonstrated rapid fluctuations in early 2020, but were able to stabilise themselves by the end of 2020.

Varying policy approaches resulted in the uneven impact seen in the recovery period. Hubei province saw a trough in its secondary and tertiary sector performance, due to the strict lockdown in its capital city, Wuhan. Hainan’s drop in rankings is owed to the shrinking of its tourism industry, which it was previously dependent on. Chongqing rising to first place is likely due to China’s “Five One” Policy, which restricted international flights to specific airports, one of which is in the province. The analysis presented in the paper also delves into the uneven speed of recovery amongst the economies, in addition to the resiliency to the initial shock.

By Sunena GUPTA

Researchers: Ke MAO, Xuyao ZHANG, Yan ZHU

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