Click here to get this post in PDF
Like so many others, China’s economy was heavily impacted by the coronavirus pandemic. Closed businesses, restriction rules, and widespread financial uncertainty were significant factors in China’s economic performance. However, following the pandemic, China focused its priorities, like the rest of the world, on optimal economic recovery.
Various factors contributed to how well China is recovering from COVID-19. In this article, you can explore how these determining factors shape China’s post-pandemic economy and what this might mean for its future – something often shown by an economic calendar. Moreso, you can learn how to benefit from this economic movement potentially.
During the first quarter of 2020, China’s economy felt the initial impact of the coronavirus. On January 23rd, China became the first to impose a lockdown in Wuhan and Hubei. Wuhan is allegedly the city where the virus originated, so understandably, the early stages of the pandemic not only affected here but the whole of China more heavily than anywhere else in the world.
In the first three months of 2020, China’s gross domestic product (GDP) shrank by 6.8%. This was the first contraction in GDP China had experienced since 1992. This highlights the sheer suddenness and subsequent weight of the pandemic’s impact on the economy. With the first lockdown in effect, China was forced, like the rest of the world, to then adjust to this sudden hit.
By the beginning of 2021, China had begun to effectively recover from their initial struggle during the pandemic’s start. As a result, the country saw a record-high GDP increase of 18.3% from the previous year in the first quarter. This is the highest number since the records began in 1990. Whilst this meant only a quarterly growth of 0.6%, it reflects the rate of recovery China made since their previous year.
This was a result of increased industrial production and containment of the coronavirus. As a result, not only was China the first country to go into a lockdown, it was also the first major economy to leave lockdown in April 2020. This gave China time to re-balance their economy and get things such as production back on track, resulting in a record-high yearly increase.
Approaching the end of 2021, China saw another slow rate of growth. In the final quarter, the GDP grew by only 4.0% compared to last year, being the lowest year-to-year growth of 2021. Several factors brought about this reduced rate of growth.
First, sudden coronavirus outbreaks affected peoples’ ability to work. Then, there were power shortages which led to power rationing in certain regions, and ultimately, power cuts. This affected many businesses and homes, causing delays in things such as manufacturing/production. All of these, paired with supply bottlenecks, caused a much slower rate of economic recovery.
As China’s economy progresses through the start of 2022, a few promising factors allude to increased recovery and growth.
Firstly, at present (February 2022), Mainland China have administered 3 billion COVID-19 vaccine doses, which is enough to have vaccinated 110% of the population. More individuals being protected from coronavirus means more workers available, more businesses open, and less chance of further restrictions. Economic growth, as a result, can benefit greatly.
Also, the World Travel & Tourism Council (WTTC) has predicted China’s travel and tourism sector to contribute 11 trillion (CNY) towards GDP this year. This figure is only 5.2% short of the pre-pandemic levels. With China’s tourism and travel returning to a level similar to pre-pandemic, the financial benefits are bound to be tremendous.
Once again, China’s present-day economy appears to be recovering well from the pandemic, and the future looks potentially bright
How can you potentially benefit from China’s economic recovery?
As China’s economy begins to change, so will the value of multiple currencies. Forex trading allows traders to exchange currencies for profit, speculating on whether a country’s currency value will rise or fall compared to another.
China’s currency – the Chinese Yuan (CYN) – is not heavily traded on forex markets, mainly due to the United States Dollar (USD)/CYN not proving an ideal trading pair. However, China’s economic performance can have major impacts on other currencies’ value due to its widespread trading and its peg to the USD.
Through expertly strategic trades, you can increase your potential for profit on the forex market, by assessing these links between China’s economic recovery and other countries’ currency values.
And in case you’re wondering what is the best forex trading platform for this, the best option is to find one that can provide you with superior forex trading tools, to enhance your trading experience in every aspect.
You may also like: How is the Global Economy Impacting Your Business?