Coronavirus or not, China must focus on the big picture: economic reforms

For China, the short-term coronavirus shock is coming on top of an economic slowdown. Policymakers now gathered at the annual NPC session remain cautious about an all-out stimulus, and will be eyeing long-term reforms to improve economic structure and boost productivity

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People commute during the morning rush hour before the opening session of the National People’s Congress in Beijing. Photo: AFP

Chaoping Zhu

Chaoping Zhu is a Shanghai-based global market strategist at JP Morgan Asset Management.

Published: 1:59pm, 22 May 2020Updated: 10:21pm, 22 May 2020

The annual session of the National People’s Congress is getting the market’s full attention these days since Beijing is expected to announce a strong stimulus package to stabilise the Chinese economy amid the Covid-19 shock. However, to my mind, the market might be overly focusing on short-term issues, while to some extent ignoring some policies over a longer time horizon.

To take a step back, the Chinese authorities have in the past few months published a series of documents pledging to push forward reforms. These reforms could also be raised for review and discussion during the NPC meeting.

Admittedly, the Covid-19 outbreak poses the foremost threat to Chinese economic growth at this moment. Despite its unprecedented severity, this pandemic should be deemed a short-term economic challenge, which could be mitigated with stimulus policies. However, for China, this short-term shock is coming on top of a secular economic slowdown.