The COVID-19 pandemic has disrupted bold plans of China’s authorities. For decades, Beijing has set a GDP plan for a year ahead and focused on ensuring this goal at all costs. The decision-making under the planned economy reminds of the good old Soviet tradition. Hundreds of delegates congregate for the Communist Party’s conventions, absorb every word of the Party’s leader, and applaud ambitious plans on the economy. With a unanimous vote, they approve directives on implementing such plans. In China, this practice has caused dismal side effects like inefficient investment, notorious “ghost cities”, and neglected lengthy railways to nowhere. In fact, Beijing’s approach has always lacked flexibility. Another common feature of Soviet-like regimes is reporting strong economic data. The ruling party thinks there is nothing wrong about covering up weak metrics and reporting fake upbeat statistics.
The pandemic highlighted backward principles of the planned economy. Reckoning China’s prospects, most experts share the viewpoint about a challenging way to its economic recovery. Switzerland-based UBS projects China’s GDP to contract in Q2 2020. Its full-year forecasts do not look more optimistic. Even China-friendly International Monetary Fund expects China’s economy to generate muted growth of around 1.2% this year. The consensus suggests that China’s economy could rise from 1.5% to 2.5% in 2020. One thing is certain that China’s economy will hardly show a V-shaped recovery this year. The most plausible scenario is an L-shaped recovery that is a protracted climb out of a bottom. According to Beijing’s data, the national economy expanded by 6.1% in 2019.