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Chinese Gross Domestic Product During COVID-19 Pandemic


Globalization of the world economy has turned the world into a small global village, characterized by the increase in the flow of trade, labor, and capital, contributing to the proliferation of the COVID-19 contagion. The COVID-19 pandemic emerged from China, spreading globally and devastatingly impacted the world economy (Maliszewska et al. 3). Its spread has led to the implementation of cross-border closures intending to contain the virus transmission. Many countries have since had to curb the pandemic’s spread through border closures and trade restrictions, especially for products from China (Dhar 24). Preventive actions taken by countries have a great impact on the economies, particularly on partner economies. The approaches employed to limit the pandemic’s spread, such as social isolation policies, are at the core of disruption of the economy.

The pandemic has hit the majority of the economies, significantly delaying business recovery and eventually damaging the production network. As a result, many countries face supply shortages disrupting the downstream and upstream supply chains (Maital & Barzani 3). Globalization, trade and investment, and supply chains have been heavily impacted, accelerating the anti-globalization trend. The impact has necessitated the reconfiguration of the global economy in the face of anti-globalization. The resultant impact has had heavy repercussions on the Chinese economy through localized shock and resultant global shock.

Theoretical part

The impact of the pandemic can be ascertained through economic models by examining the direct impact on employment, high international transactions costs, a sharp reduction in travel, and the downtrend of the demand of services requiring proximity between people when the pandemic scenario is observed through the global and amplified global pandemic (Maliszewska et al. 4). The transmission channels have been impacted by shocks that have occurred simultaneously and are unsynchronized across most countries.

The pandemic has significantly contributed to the underutilization of capacity due to the closure of companies and social distancing obligating employees to stay at home. The majority of the employees in China lost their jobs due to containment measures (Fernandes 15). With high contagion rates, consequences of unemployment, and adverse shock demand, there has been an underutilization of the labor force in all sectors of the economy (Chen et al. 10). Similarly, there has been an accelerated increase in transaction and transportation costs relating to foreign trade chiefly due to border closures, a decline in operation hours, a rise in transport costs, and road closures. The pandemic is influencing many nations and is characterized by more severe containment measures because of the efforts to contain the virus. The pandemic has led to a sharp drop in international tourism. Export tax is applied to inbound and outbound services, including food, accommodation and service activities, air, water, and recreational services.

Empirical part

The high rate of COVID-19 contagion has contributed to the underutilization of the labor force at around 3% on average in all sectors of the economy (Maliszewska et al. 5). The Chinese economy’s GDP has been impacted because of these unprecedented effects depending on the intensity and duration of containment measures and sectoral composition of employment and how flexible the labor market is. The Chinese GDP declined by 4.3%, mainly because of the trade integration where tourism is a major component of the economy (Maliszewska et al. 9). COVID-19’s effect on the tourism and hospitality sector has been staggering, with quarterly revenues down by 75% (Maliszewska et al. 6). The majority of the Chinese airlines had to cancel flights bringing international travel to a halt.

China, recognized as the world’s factory, has suffered a decrease in the production of goods across sectors of the economy. China being central to the world’s network, has created a secondary supply chain shock because of the disruption in manufacturing (Baldwin & Tomiura 15). While exports on the global level encounter a 2.5% decrease, China faces a decline of 3.7% in exports (Maliszewska et al. 8). The major declines in exports in Chinese products occurred in manufacturing goods exported to Europe and the United States.


The drastic measures undertaken by the Chinese government to mitigate the spread of the pandemic is a clear indication that the economy comes second after health, particularly in the face of deaths as a consequence. The production rate across all sectors of the economy suffers a brutal blow from the low human capital. The impact on the GDP will be determined by the proportion of employees in the population who are affected by the pandemic leading to death. The overall impact is a supply and demand shock, especially in prolonged restrictions (Baldwin & Tomiura 61). The primary reason being the social trend of consumption of goods and services. Restrictions such as social distancing generally result in demand shocks as consumers demand the social consumption of certain products and services.

The underutilization of labor across all sectors of the global economy due to the pandemic has resulted in the decline of capital usage. The costs of global exports and imports have increased because of the containment factors of the virus (Boone et al. 11). The underutilization of labor and costs of exports and imports relating to goods and services have had a devastating impact on China’s GDP. China has had strong international supply chain linkages due to export and imports connections with major world powers such as the US and UK. The restrictions brought about by the pandemic contagion measures have slowed down the international supply chain for China, generally resulting in a decline in the GDP.

Moreover, there has been an acute decline in international tourism characterized by the high tax on outbound and inbound tourism-related services, including accommodation and transport. High taxes during the pandemic have limited the Chinese economy’s full exploration of the available global demand for services and goods. COVID-19 has also led to a reallocation of demand to sectors that utilize limited human interactions. Measures such as social distancing have meant the country has to adjust its way of conducting business, closing non-compliant businesses. China has reported low demand for services requiring human interaction. The remaining services sectors have substituted such sectors.


The COVID-19 pandemic is fast spreading across the world. The pandemic has increased uncertainty and adversely influenced sentiments through the authority’s response, the consumers’ response due to fear of being infected, and the overall business sentiment to the virus. Most of the countries have resorted to containment measures to reduce the mortality rate and further spread. These containment measures have substantially aggravated the economies of the world by limiting trade and various economic activities. China, a major world economy relying on manufacturing and production, has suffered a major shock leading to low GDP. There has been a significant potential loss of income in China as the pandemic ravages.

The government should explore keeping public utilities and services running when employees involved in these services fall ill. Exploring options that aim at preventing demand and supply shocks should involve expert opinion across all sectors of the economy. The health consequences of the pandemic need not be exaggerated at the expense of economic destruction because of poor policies and regulations created out of fear rather than based on knowledge and facts.

The economic costs are further heightened by the need to contain the spread of the virus, particularly in China, where it emerged. The decline in the GDP for China is evidence of a demand for global collaboration to respond to the pandemic. The global collaboration should focus on the finance, macroeconomic and trade policies aiming at coordinating efforts that ensure financial and technical support to nations that rely on manufacturing exports and imports to alleviate the economic consequences of the outbreak.

Works Cited

Baldwin, Richard, and Eiichi Tomiura. “Thinking ahead about the trade impact of COVID-19.” Economics in the Time of COVID-19 59 (2020).

Boone, Laurence, David Haugh, Nigel Pain, and Veronique Salins. “Tackling the fallout from COVID-19.” Economics in the Time of COVID-19 37 (2020).

Chen, Haiqiang, Wenlan Qian, and Qiang Wen. “The impact of the COVID-19 pandemic on consumption: Learning from high-frequency transaction data.” AEA Papers and Proceedings. Vol. 111. 2021.

Dhar, Bablu Kumar. “Impact of COVID-19 on Chinese Economy.” Economic Affairs 9.3/4 (2020): 23-26.

Fernandes, Nuno. “Economic effects of coronavirus outbreak (COVID-19) on the world economy.” Available at SSRN 3557504 (2020).

Maital, Shlomo, and Ella Barzani. “The global economic impact of COVID-19: A summary of the research.” Samuel Neaman Institute for National Policy Research 2020 (2020): 1-12.

Maliszewska, Maryla, Aaditya Mattoo, and Dominique Van Der Mensbrugghe. “The potential impact of COVID-19 on GDP and trade: A preliminary assessment.” World Bank Policy Research Working Paper 9211 (2020).

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StudyKraken. (2023, February 15). Chinese Gross Domestic Product During COVID-19 Pandemic.

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"Chinese Gross Domestic Product During COVID-19 Pandemic." StudyKraken, 15 Feb. 2023,

1. StudyKraken. "Chinese Gross Domestic Product During COVID-19 Pandemic." February 15, 2023.


StudyKraken. "Chinese Gross Domestic Product During COVID-19 Pandemic." February 15, 2023.


StudyKraken. 2023. "Chinese Gross Domestic Product During COVID-19 Pandemic." February 15, 2023.


StudyKraken. (2023) 'Chinese Gross Domestic Product During COVID-19 Pandemic'. 15 February.

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