The economic impact of the coronavirus pandemic is and will be severe, and the outlook for global growth for 2020 is negative—a recession at least as bad as during the global financial crisis or worse, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said in a statement on March 23.

How to properly cope with the impacts of the pandemic and maintain the stability of domestic financial market is a question that all countries should answer. Chen Yulu, vice governor of the People’s Bank of China (PBOC), said China’s economy has withstood the shocks caused by the pandemic and contributed to global financial stability.

Chinese enterprises are resuming production in an orderly manner as the domestic epidemic situation has eased. Such efforts have brought production and the commodity market back to normal, and thus lowering commodity prices on a quarter-to-quarter basis.

“The macroeconomic operation of China is generally stable, and the supply and demand is basically balanced, which indicates the country is not prone to long-term inflation or deflation,” Chen explained.

Affected by the pandemic, the foreign currency market saw major fluctuations. For example, the euro has depreciated by 4.7 percent against the U.S. dollar since earlier this year. The pound has slumped by more than 12 percent against the U.S. dollar. Comparatively, the renminbi depreciated by only 1.8 percent against the U.S. dollar. With all other factors considered, the yuan exchange rate composite index has risen, according to the China Foreign Exchange Trade System.

In the medium and long term, the fundamentals of the Chinese economy and its currency and financial conditions will effectively prop up stable cross-border capital flows, and the renminbi exchange rate will fluctuate in both ways in a rational range, said Xuan Changneng, deputy director of the State Administration of Foreign Exchange (SAFE), adding there is no conditions under which the renminbi will drastically depreciate.

China’s financial market has generally maintained stable and the A-share stock market demonstrated strong resilience and risk resistance capacity. This is attributable to the continuous supply-side structural reform in the financial sector and effective preventative measures the country has taken to cope with risks.

“China lowered the market leverages, and the total leverage capital of the present stock market has decreased by 80 percent compared with its peak level in 2015. To handle pledged stock risks, we have also taken measures to reduce reserves and control increment, and our major risk index is showing an improving trend, with the number of listed companies in which a large proportion of shares are pledged decreased by one-third compared with the peak time,” according to Li Chao, vice chairman of the China Securities Regulatory Commission.

As important institutional investors, the insurance companies are a long-term stable source of capital, said Zhou Liang, vice chairman of the China Banking and Insurance Regulatory Commission.

Currently, Chinese insurance companies have a surplus of insurance capital utilization totaling 18.8 trillion yuan, of which about 2 trillion yuan is invested in stocks and funds, Zhou added.

Since the outbreak of the epidemic, China’s central bank has strengthened policy coordination with international organizations and major global central banks through multilateral, regional and bilateral channels.

Next step, China will strengthen monitoring of operations of international financial markets, analyze and explore the inherent laws embedded in the current international financial turbulence, and timely propose constructive suggestions on international coordination about economic policy based on China’s policy experience in coping with the economic plight entailed by the epidemic. Meanwhile, the People’s Bank of China will offer international bailouts to developing countries which have suffered great setbacks during the epidemic, according to Chen Yulu.

Chinese President Xi Jinping on March 26 attended a special Group of 20 (G20) summit via video conference from Beijing to discuss the COVID-19 pandemic. While taking prevention and control measures, China sees orderly resumption of production and plays an important role in stabilizing the global industrial and supply chains.

China expects countries to leverage and coordinate their macro policies, take necessary fiscal, monetary and structural policies to promote market openness, create an open, stable, safe and smooth global supply chain, and play a constructive role in boosting market confidence.

A merchant hosts a livestreaming show to sell her products on Xiushui Street, a shopping center in Chaoyang district, Beijing, March 3, 2020. The shopping center reopened to business on the same day. Photo by Liu Jing/People’s Daily Online
Photo taken on March 24, 2020 shows fishing vessels near a port in Yinhai district of Beihai, south China’s Guangxi Zhuang Autonomous Region. Ports in the city have resumed work to improve fish production amid epidemic prevention and control. Photo by Li Junguang/People’s Daily Online