While there are reassuring signs of economic normalization in China—most larger firms have reported reopening their doors and many local employees are back at their jobs—stark risks remain. This includes new infections rising again as national and international travel resumes.
Even in the absence of another outbreak in China, the ongoing pandemic is creating economic risks. For example, as more countries face outbreaks and global financial markets gyrate, consumers and firms may remain wary, depressing global demand for Chinese goods just as the economy is getting back to work.
Therefore, Chinese policymakers will have to be ready to support growth and financial stability if needed. Given the global nature of the outbreak, many of these efforts will be most effective if coordinated internationally.