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Commentary: COVID-19 is just a bump in the road of China’s long-term development

China is on track in achieving its three goals of national development outlined in the 13th Five Year Plan, says an observer.

Commentary: COVID-19 is just a bump in the road of China’s long-term development

An elderly man wearing a face mask has his temperature checked before entering a community hospital in Shanghai, China. (NOEL CELIS/AFP)

BEIJING: The ongoing COVID-19 outbreak has hit the Chinese economy dramatically because of measures countries have taken to restrict the movement of people.

Such restrictions have knock-on effects on labour migration, household consumption, travel and tourism, and operation of shops and factories.

But it is likely to generate negative economic impacts only for one or two quarters, and not the whole year.

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This year is of particular significance for China. It is the deadline for both the completion of building a comprehensive well-off society and the 13th Five-Year Plan.

The three most symbolic goals set to be achieved by the end of 2020 are: Doubling GDP based on its 2010 volume; doubling average household income compared to its 2010 level; and completely eliminating rural poverty.

Whether these objectives are achieved will indicate the extent that the COVID-19 outbreak has impeded China’s long-term development and how much the world can rely on China’s growth, as China contributed over 40 per cent to global growth in 2019.

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It is too early to assess precisely China’s economic losses and damage to people’s livelihoods, with COVID-19 yet to be contained and economic activities still on hold.

But based on emerging trends of the outbreak and what China had already done by the end of 2019 towards accomplishing the goals it has set, China can be confident in meeting them by the end of 2020.

Chinese President Xi Jinping (centre) wearing a protective face mask waves as he inspects the novel coronavirus pneumonia prevention and control work at a neighbourhoods in Beijing. (Pang Xinglei/Xinhua via AP)


The first goal is to double China’s GDP from the base of 2010. China’s GDP was 41.2 trillion yuan (US$5.9 trillion) in 2010 and it is expected to reach 82.4 trillion yuan this year.

China will need a growth rate between 5.5 and 5.6 per cent to realise its goal of doubling GDP in 2020.

The underlying trend of China’s growth will determine whether China will reach its target. Since China’s working age population is shrinking, causing the population dependency ratio to rise, a growth slowdown is expected.

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The year 2019 saw the lowest GDP growth post-1990, and it is expected to slump further in 2020 and beyond. Before the coronavirus outbreak, economists expected a growth rate of 5.8 to 6 per cent for 2020.

Economists have different estimates of the impacts of COVID-19 on China’s growth rate in 2020. The estimates range between 5.5 and 5.7 per cent depending on assumptions about whether the coronavirus will be contained, allowing economic activities to resume, by the end of the first quarter or the second quarter.

But both scenarios will allow China to accomplish its goal of doubling its 2010 GDP.

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The second goal is to double household income.

Average disposable income of rural and urban households was 12,520 yuan in 2010 and is expected to increase to 26,795 yuan at constant prices by the end of 2020.

A worker wearing a protective suit gestures to a driver outside a tumour hospital newly designated to treat COVID-19 patients in Wuhan in central China's Hubei Province on Feb 15, 2020. (Photo: Chinatopix via AP)

Thanks to the inflation of ordinary workers’ wages as a result of a labour shortage and minimum wage rise, household income has rapidly increased at an annual rate of 7.8 per cent.

As a result, household income increased to 24,582 yuan in real terms in 2019. The objective of doubling household income can be easily achieved with a growth rate of just 1.9 per cent this year.


The third goal is eliminating rural poverty. The poverty line is defined at 2,300 yuan at 2011 prices with expected yearly adjustment based on price index and other considerations.

In 2012, there were 99 million people in rural poverty – people with an income of under 2,673 yuan per year.

Between 2012 and 2019, the average number of people lifted out of poverty each year was over 13 million, leaving only 5.5 million to be lifted out of poverty in 2020. China can thus expect to fulfil its goal of reducing poverty by the end of 2020.

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Even though COVID-19 will generate short-term economic pain, China’s long-term development and progress in achieving the goals of the 13th Five-Year Plan by the end of 2020 are still on track.

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Cai Fang is Vice President at the Chinese Academy of Social Sciences (CASS). This article first appeared on East Asia Forum.

Source: CNA/el


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