Former World Bank economist Wang Yan: The global crisis requires countries to cooperate to protect vulnerable groups

Former World Bank economist Wang Yan: The global crisis requires countries to cooperate to protect vulnerable groups
Opening slogan: The epidemic of New Coronary Pneumonia continues to spread and panic sweeps the global market.Several major stock markets around the world triggered a fuse mechanism to suspend trading, and dozens of stock markets entered a “technical bear market.”In essence, some countries have introduced bailout measures, including temporarily prohibiting short-selling of stocks and placing liquidity.Is the global economic crisis coming?How do you view the economic budgets of the world’s major economies?Will the epidemic pose some real challenges?How does the global economy respond to the impact of the epidemic?After the epidemic, will the global political and economic pattern change?Sauna Night invites scholars from China, the United States, Japan, the United Kingdom, Australia and many other countries and regions to record their economic observations around the economic integration of the domestic public’s attention.Today we are launching the third issue of Wang Yan, a former World Bank economist: the global crisis requires cooperation and protection of vulnerable groups.The following are the global economic observations of Wang Yan, a former senior economist of the World Bank, and Xu Yinyin, a member of the United Nations Headquarters Sustainability Financing Project Research Group: former senior economist of the World Bank, vice president of the IFF Institute, and research on new structural economics at Peking UniversityWang Yan, a senior visiting scholar at the Institute.Since the outbreak of severe acute respiratory syndrome (SARS) in 2003, the world has become more integrated and the global cost of infectious diseases has risen.As of March 18, 2020, the death toll of the new coronavirus has reached at least 8,727, and the virus has infected more than 200,000 people. On the afternoon of March 11, 2020, the World Health Organization (WHO) raised the highest level of alert for the new coronary pneumonia (COVID-19) epidemic, confirming it as a global pandemic.Compared with the SARS outbreak index in 2003, the new coronavirus may have a huge economic impact that is unpredictable in China and globally.Considering the impact of the remaining tedious data and the difficulty of separating single factors on the regional and global economy at this stage, this trend is difficult to be clearly explained.However, in the long run, past stock market history and the global economy, although their performance has suffered a certain degree of impact during the onset of infectious diseases, still provide some evidence for a predictable recovery.However, with the 2003 score, the current world economy has gradually become more vulnerable.[Stock market]The immediate impact of the epidemic on the stock market, but the Chinese stock market has begun to slowly recover. In 2003, the outbreak of the SARS epidemic swept through Asian markets and economies, but only had a short-term impact on the Chinese stock market.It was recovered within a month.As the spread of the disease slowed down at the time, Hong Kong also experienced a similar rapid recovery.The immediate impact of the epidemic on the stock market is of this kind.The Chinese stock market reopened 10 days after the Spring Festival closed and suffered from the impact of the new crown virus epidemic: the Shanghai Stock Index, Shenzhen Component Index, Shanghai and Shenzhen 300, and the four major GEM indexes fell 8%.Although the People’s Bank of China lowered short-term interest rates to ease economic pressure, it injected 1.2 trillion yuan, the Shanghai Composite Index still fell by 7.72% is the biggest decline in more than four years.Companies in manufacturing, real estate, and construction have blocked severe blows, while most healthcare stocks have improved.Globally, stock markets in Japan, Mexico and Australia have shown a significant decline, while other countries have remained basically unchanged.In the following week, most of the Asia-Pacific market showed a decline, but the Shanghai Composite Index grew by 0.33%, closed at 2875.96.The Chinese stock market has begun to recover slowly.However, due to the impact of the new coronavirus, after the outbreak of the United States, from March 8 to March 19, the second, third, fourth and fifth fuse occurred in history.On March 16, Beijing time, the S & P 500 index opened down 220.55 points to 2490.47 points, a decrease of 8.14% triggered the third blow, and US stocks suspended trading for 15 minutes.The Nasdaq index opened down 482.15 points, a drop of 6.12%, reported 7392.73 points; Dow Jones index opened down by 2250.46 points, a drop of 9.71%, reported to 20935.16 o’clock.After resuming trading, the decline in US stocks continued to expand. The Dow once fell more than 12%, the largest decline since 1987.US stocks continued to decline when this article was killed, and the fifth meltdown in history occurred on March 18, a decline of 6.3%, trading is suspended again for 15 minutes.The US President has previously stated that the US “may” is heading for an economic recession.[Economic growth]The new crown epidemic may have caused losses of nearly 2 trillion US dollars. Global economic growth will decline. According to research results, the global economic loss caused by SARS in 2003 was 40 billion US dollars. It is estimated that growth has dropped by 0.1%. As summarized by the Asian Development Bank (ADB), SARS has severely affected short-term economic growth on the demand side, especially for the service industry, but its long-term impact is to some extent the government can quickly implement effective public health policies.Soon after the SARS crisis subsided in 2003, China’s overall economic situation quickly recovered, with economic growth from 9.1% climbed to 10% annual growth.Although certain industries, such as aviation, tourism and other tourism-related industries, are threatened, the outbreak of SARS appears to benefit the biotechnology / pharmaceutical industry.Considering the outbreak, the International Monetary Fund is likely to replace China ‘s economic growth in 20205.6%, an earlier expected drop of 0.4 averages.According to the same estimation method, the United Nations Conference on Trade and Development (UNCTAD) predicts that on a global scale, economic growth will drop by a decomposition, which will result in a loss of income of about 900 billion US dollars, and GDP growth in 2020 will be 1.7%.The organization predicts that the new coronavirus caused nearly $ 2 trillion in damage.[Three major industries]New crown pneumonia outbreak severely hits regional tourism industry Toothbrush hits emerging markets and developing economies During the 14-day quarantine period, some panicked citizens began to store fresh food, which brought China ‘s food supplySome challenges.For cities that rely heavily on food imports, such as Hong Kong, the situation is even worse.On February 7, the Shouguang Vegetable Price Index rose by 0.64% to 175.38 points, soared to a new high in many years, which also means that the retail price of fresh food in many places began to rise.The epidemic also interrupted the transportation of meat to China, which clearly signaled the overlap of meat.Due to African swine fever, domestic pork prices are already high, and China will begin to reduce the size of local meat imports. Similarly, it has been reported that due to China’s limited imports from India and New Zealand, the outbreak has caused the prices of cumin, sesame, peanut oil and dairy products to fall sharply.On the contrary, at present, people are hoarding supplies for life and epidemic prevention in the United States, especially in areas with severe epidemics.Modern travel and labor migration models play a key role in the spread of the epidemic.The economic burden of the epidemic on society and the additional traditionally estimated private and non-private medical costs (diagnosis and treatment) related to the disease also include reduced income due to disease-related morbidity and mortality.Facts have proved that due to fear and panic, the outbreak of SARS in 2003 reduced the level of social interaction, which in turn reduced the volume of economic transactions, and the boots affected the economy. Although reducing social interactions also helps reduce the spread of disease, and thus can control the economic impact of the direct consequences of the epidemic, the impact of the epidemic on manufacturing delays in manufacturing is still difficult to solve.Especially in the rapid and rapid situation, until the finished product is not assembled in China, large manufacturing companies still rely on parts suppliers throughout the manufacturing centers across the country to ensure the integrity of the supply chain.In the short term, the closure of the factory has caused some supply disruptions nationwide.In the provinces and cities with special economic zones (SEZs) that are the most stringently segregated, some of them have been extended for two weeks due to safety concerns.Although there is some optimism that the new coronavirus outbreak will have a relatively short-term impact on the global market, small and medium-sized companies are still facing logistics problems and operational challenges, which existed before the outbreak.Since China has become the manufacturing center for many global operations, the simultaneous production of China will have an impact on any particular country, which is precisely how dependent its industry is on Chinese suppliers.Especially in Hubei Province, the demand for metals will drop sharply.Hubei Province, as a major automobile manufacturing province, has an annual output of 25 million vehicles, accounting for 9% of China’s motor vehicles.According to preliminary estimates by the United Nations Conference on Trade and Development (UNCTAD), this crisis may lead to a reduction of at least US $ 50 billion in commodity exports in the global value chain.Preliminary data for 2019 indicate that world trade volume has shrunk by 3% over the previous year. Preliminary predictions for 2020 and 2021 indicate that if the continued trade tensions among the major economies are balanced and the international trading environment stabilizes,It will grow moderately.However, considering the impact of the COVID-19 crisis on international trade, these forecasts have to be lowered.In addition, the tourism industry and tourism-related sectors were severely affected by the SARS outbreak in 2003.According to the International Air Transport Association (IATA) estimates, the SARS outbreak and the reduction in traffic and revenue passenger kilometers (RPK) have had a huge impact on the aviation industry.Asia-Pacific airlines lost 39 billion RPKs (approximately 8% of annual traffic), resulting in approximately US $ 6 billion in revenue losses; North American Airlines made up approximately US $ 1 billion, consisting of 12.8 billion RPKs (accounting for the total internationalFlow) 3.7%).Under the rankings, the aviation industry is quite optimistic about the outbreak of the new coronavirus.In the early days of the outbreak of the new crown, the International Air Transport Association (IATA) said that historical evidence indicates that coronaviruses are unlikely to have a long-term impact on air travel demand, and the aviation industry can finally weather the impact of the outbreak.However, as countries expanded the scale of the epidemic deeper and deeper, flights to Europe, Asia, and North America cancelled flights to and from China, with flights ranging from half a month to two months.Since the end of January, many countries and regions in Asia have issued entry bans.After the massive outbreak of the European epidemic, the United States issued a ban, which banned travellers from European Schengen countries other than the United Kingdom from entering the United States from March 13, and the ban lasted for 30 days.The outbreak of the new coronavirus caused a serious blow to the regional tourism industry.In the past two decades, through the rapid development of the Chinese economy, Chinese tourists have constituted the largest group of foreign tourists in Asia, and the number of people who travel to Europe and North America each year has also increased.In 2019, most Chinese tourists travel to other Asia-Pacific countries and regions, among which the resorts are Thailand, Japan, South Korea, Vietnam, Singapore, Malaysia and Cambodia. The week-long Chinese New Year holiday has long been a strong growth in tourism revenue and the number of tourists.However, due to travel restrictions, the regional tourism sector is now facing continuous cancellations and falling bookings.The regional tourism industry was forced to spend difficult months.As one of the major international tourist destinations for Chinese tourists, Thailand is estimated to lose 35 due to the outbreak of the virus.$ 100 million in tourism revenue. Vietnam lost about 2 million Chinese tourists, causing losses of US $ 1.8 billion to US $ 2 billion.Chinese tourists are the country’s largest source of foreign tourists.This loss is a huge blow to emerging markets and developing economies (EMDE).[Policy impact]To upgrade disease prevention and control mechanisms and increase investment in disease prevention and control In the new structural economics proposed by Lin Yifu, he pointed out that economic development is a dynamic process that requires structural changes, including in eachUpgrade the industry at the level and improve the “hard” (tangible) and “soft” (intangible) infrastructure accordingly.Under unprecedented and unpredictable impacts such as epidemics, intangible endowments such as hydraulics and capital play an important role.Generally, in this case, the market mechanism alone cannot fully cope with it. Therefore, the government needs to actively promote structural transformation to achieve industrial diversification and industrial upgrading.The current outbreak has given us an early signal.Due to the continuing fear of coronaviruses both domestically and globally, medical supplies and coronavirus detection kits were once wasted.The impact of the outbreak on agriculture, manufacturing and services is very obvious.Competition is being tested, and it shows its weakness under the impact.The epidemic has sounded the alarm for policy makers around the world to formulate and adopt policies and measures to prevent and respond to infectious diseases in a timely manner.Faced with this global epidemic, the world faces greater uncertainty, and these pose more challenges to countries with weak public health systems that are undergoing structural transformation, such as emerging markets and developing economies.To improve the potential economic impact, the government needs to pay special attention to industries that are labor-intensive and relatively dependent on sustainable capital flows.Especially for the manufacturing industry, which is one of the main engines of economic growth, the government of emerging market economies promotes the rapid start-up process of structural transformation by developing industries with potential comparative advantages. It should also provide appropriate facilities in time by taking measures.Countries can properly protect such industries, including tax cuts and increased investment in infrastructure construction for SMEs.However, at the same time, it should not be overlooked that the West has long regarded industrial policy as the target of attack and criticism.Therefore, the focus of the policy needs to be placed more on attracting investment to deal with or ease the pressure caused by the shock.As a rising star, China chooses a geese pattern theory based on East Asian experience-that is, to tap potential comparative advantages, supplemented by local gradual reforms, thereby attracting rapid development strategies for foreign direct investment.Since then, until the investment in human capital and the labor cost of relative costs, China has gradually transformed its export model from labor-intensive products to more complex products.The vigorous development of the manufacturing industry has to a certain extent replaced the substitution effect brought about by the SARS epidemic in 2003.However, the development of China’s public health system lags far behind economic development.At present, China’s health care expenditure as a percentage of GDP is still very small, much lower than countries with the same income worldwide.(Figure 1) Figure 1: Health care expenditure as a percentage of GDP (%), data source from 2000 to 2016: World Development Indicators, World Bank, 2000-2016 From a long-term perspective, the public health system needs both encouragement andTo conduct more scientific research to catch up with the speed of economic growth, it is also necessary to upgrade disease prevention and control mechanisms and increase investment in disease prevention and control.At the same time, public health development can also take advantage of technological development.Although the previous economic growth has been slightly intensified, it is still growing, but due to weeks of isolation and factory closures, the uncoordinated development of public health and social welfare systems has caused citizens to experience a huge impact on social life.In the face of “impact”, the unprepared battle will not only slow down economic growth, but also interfere with social stability to a certain extent.2001 Nobel Prize winner Joseph Stiglitz recently published an article on Project Syndicate, stating that “one prevention is better than ten cures.””At the same time, he also introduced the current situation of vulnerable groups in the United States.” Because there is no paid sick leave, many infected workers who have struggled to make ends meet will continue to work no matter what.Because they have no medical insurance and are afraid of carrying huge medical expenses, they will be reluctant to undergo testing and treatment.”As a result, we are still struggling to cope, and many mergers are in a visible crisis in the global outbreak.Although the overall epidemic has not yet erupted in Africa, if the new coronavirus causes a large number of people to be infected in one or more countries in Africa, the consequences will be unimaginable.The United Nations Economic Commission for Africa (UNECA) forecasts at this stage that Africa ‘s economic growth will replace 2020.2% down to 1.8%.The outbreaks of the epidemic at this stage have had a great impact on Africa’s foreign trade. The biggest impact is on crude oil exports. It is predicted that the current outbreak has caused 65 billion US dollars in losses in Africa.The drop in commodity prices may cause great financial pressure on African governments, so it is unable to effectively respond to the possible outbreak.Chinese culture advocates “to stand for oneself, to stand for oneself, to reach oneself with oneself”.This is also an important principle of China’s handling of international relations and an important part of China’s foreign strategic thinking.At the critical juncture of outbreaks in various parts of the world, while ensuring that the “Chinese War Epidemic” will gradually win, China has sent medical teams to Iran, Iraq, Italy and other countries, and provided anti-epidemic materials such as testing reagents to many countries.These actions have clearly demonstrated China’s strong intention: to work with other countries to build a new type of international relations and work together to create a beautiful vision of a community of shared future for mankind.Author: former World Bank senior economist, IFF Research Institute, Institute of the new structure of economics at Peking University senior visiting scholar Wang Yan; XU India Indian sauna financing project team members at United Nations Headquarters on Sustainable Development, night network Hourun Fang Chen Li editor Proofreading Li Xiangling

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