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China just became the first country to grow its economy after Covid-19. What lessons can the U.S. learn?

The IMF estimated China's GDP will grow by 1.9 percent for all of 2020, the only major economy to inch back into positive territory in a year that saw economies around the globe tumble sharply.
China Automobile Manufacturing Industry
Workers weld in a car manufacturing plant in Qingzhou city, China on Sept. 30, 2020.Costfoto / Barcroft Media via Getty Images

Chinese officials announced this week that the country’s economy grew by 4.9 percent in the third quarter, a positive sign from the initial Covid-19 epicenter. Some of the rebound in the world’s second-largest economy is due to containment measures that would be hard to replicate or enforce in a democracy — but there are still lessons the United States can learn.

“It’s not clear, really, that is this a credible number,” said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics. “It’s just not credible in my opinion, unless you assume some very significant productivity improvement,” he said, since some metrics of industrial activity were weaker than the official GDP growth figures would indicate.

Alicia Garcia Herrero, chief economist, Asia Pacific at Natixis, noted that retail sales figures, although improving, remain lower than they were a year ago, and private sector investment remains depressed.

“The challenge ahead is whether, and to what extent, household disposable income could be further lifted to speed up consumption,” she said, as well as sustaining an export-driven manufacturing recovery in an environment where global demand remains slack.

But even the economists who doubt Beijing’s numbers agree that China’s economy is on the rebound. The IMF estimated that its GDP will grow by 1.9 percent for all of 2020, the only major economy to inch back into positive territory in a year that saw economies around the globe tumble sharply.

China's economic improvements “would not have been possible if China was suffering from the same second waves of the virus we’re seeing in most parts of the developed world.”

“China’s success so far in preventing small clusters of Covid-19 from eruption controllably certainly was key to the economy retaining positive growth momentum in Q3,” Chanco said, adding that these improvements “would not have been possible if China was suffering from the same second waves of the virus we’re seeing in most parts of the developed world.”

To an extent, China’s success containing and mitigating the spread of the coronavirus is the result of an authoritarian government and surveillance state that had the autonomy to impose sweeping lockdowns, prohibit travel and mandate contact tracing protocols.

“There's no doubt that the Chinese government has had tools at its disposal that you don't have in a democracy. You can't force everyone to download a tracing app and literally lock up thousands who are infected,” Kirkegaard said.

He also pointed out, though, that places like Taiwan and New Zealand have also succeeded in largely eradicating the spread of Covid-19. “It’s not true that it's only dictatorships that can do this,” he said.

The difference lies in a coordinated central response, a willingness to funnel resources where needed and adherence to public health experts’ recommendations, experts said.

Mark Zandi, chief economist at Moody’s Analytics, said early and decisive government action made all the difference in Australia, China, New Zealand, Singapore and South Korea. Aggressive lockdowns and cautious reopening protocols — including mandatory contact tracing and enforcement of quarantine directives — cut community spread.

“The benefits of mask-wearing and social distancing have also been taken as scientific givens, and not as subjects for political debate,” Zandi added.

Unlike the Trump administration’s crusade against increased testing, countries that have successfully contained the virus scaled up their ability to test large portions of their populations.

“They poured massive resources into testing and tracing,” Kirkegaard said. “They never doubted science and they never really had this idea that there was some sort of trade-off between the virus and the severity of the lockdown.”