United States declines, China progresses
By Hedelberto López Blanch
October 14, 2020
Translated and edited by Walter Lippmann for CubaNews.
After the economic-social debacle represented by the expansion of the Covid-19 pandemic through almost all the nations of the world, the People’s Republic of China, where the virus was detected for the first time, has managed to raise its economy while that of the United States continues to fall.
The specialists assure that this great difference between the two main economic powers of the world is due to the fact that China, from the first moments, took the pertinent measures to control the disease, in contrast to the United States whose President Donald Trump dismissed the seriousness of the virus.
The North American retreat has been occurring since the last decade and it increased with the appearance of the coronavirus, fundamentally due to the laziness of its officials to face it.
Several data point out the weaknesses of the American giant because despite being a power with very important resources and capabilities for the welfare of most of its inhabitants, their real wage today is lower than 40 years ago.
Under that premise, the average employee must work twice as many years as three decades ago to pay the price of a small apartment.
The level of inequality has progressively worsened among the population with stagnation of real wages compared to the cost of living. Almost 50 million people are below the poverty line and 36% of Americans lack the health insurance that gives them access to specialized health care.
In the last decade, suicides increased 24% and at the same time life expectancy decreased to only 76.10 years. In Cuba, a developing country economically and financially blockaded by Washington, that rate is 78.2 years.
Recently the Department of Commerce reported that the country’s economy contracted in the second quarter of 2020 at the fastest rate in its history and represents the biggest debacle since World War II.
According to the Department’s Bureau of Economic Analysis, real Gross Domestic Product (GDP) declined at a rate of 32.9 percent in the second quarter of 2020 due to the disastrous effects of the pandemic. In the first quarter, it was minus 5 percent.
The Organization for Economic Cooperation and Development (OECD) estimated a 7.3% drop in US GDP for 2020, a figure that could be altered if the coronavirus wave is sustained or increased.
Meanwhile, China emerges as the powerhouse that will end the year of the pandemic with positive economic growth. If in the first quarter its GDP was at minus 6.8%, in the second quarter it grew by 3.2%, exceeding all analysts’ forecasts.
The National Statistics Office of the Asian giant indicated that “in the second quarter growth went from negative to positive”, in a context of economic recovery after the stagnation caused by the coronavirus and that “the market outlook is generally good”.
In nominal terms, China’s total wealth in the first half of the year stood at 45.66 trillion yuan ($6.53 billion).
For the Beijing government, the health policy adopted throughout the nation has been fundamental, through which it has been able to control covid-19, even in asymptomatic people.
Since August 16, no local infections have been recorded and only imported cases have been detected, people who immediately go into a 14-day quarantine.
Of course, this way of stopping the proliferation of the disease contrasts with those applied in the United States and other Western nations. A free health-care policy has been essential to achieving this.
The IHS Markit agency reported that exports represented 20% of the global total between April and June, seven percentage points more than in the same period in 2019, and also applied the alternative of increasing domestic consumption among its large population.
The Asian giant’s recovery has been influenced by the rapid digital transformation of its economy, which was growing strongly before the pandemic, and which accelerated with it.
In 2018 it already represented 34.8% of the Gross Domestic Product (GDP), a percentage that grew year after year above the growth of the Product.
Zhang Jun, dean of Fudan University’s School of Economics and director of China’s Center for Economic Studies, explained that families, unable to leave their homes, adopted applications such as JD.com, Meituan, Eleme and Pinduoduo for daily product purchases.
The companies took advantage of digital tools, from communication platforms such as Enterprise WeChat and DingTalk to electronic contracts, to keep their businesses running.
The end result has been that China is on its way to an economic revival, while in the United States there is still no light at the end of the tunnel.