Two countries, going in opposite directions
By Scott Sumner
The Wall Street Journal has an interesting article on the Covid-19 situation in the US and China:
In recent days, many U.S. states have been forced to reverse course and shut down restaurants and bars and require face coverings in public settings as new daily infections surpassed 50,000 on Wednesday for the first time.
The new wave of coronavirus infections and restrictions on business activity threatens to throw a nascent recovery off course, after the U.S. on Thursday reported a second straight monthly drop in the jobless rate in June.
That doesn’t sound good. Meanwhile, in China the virus seems under control:
In China, meantime, health authorities have aggressively attacked even small outbreaks as they emerge across the country. The most recent cluster, which broke out at Beijing’s largest wholesale food market last month, prompted a swift and vigorous response from the local government, including the testing of millions of citizens and new restrictions on people’s movements in and out of the capital.
On Friday, Chinese health authorities reported just two new locally transmitted infections in the country for the previous day, both of them in Beijing.
This may allow the Chinese economy to boom in the second half:
The Chinese economic data released on Friday showed the number of total new businesses rising at the sharpest rate since August 2010, as service providers made plans for increases in consumer demand in the coming months, Caixin said. . . .
Sporadic outbreaks in China shouldn’t derail its economic recovery, said Lian Ping, an economist at Zhixin Investment Research Institute. The Shanghai-based economist is forecasting year-over-year economic growth of more than 6% in the latter half of 2020—roughly in line with the 6.1% gross domestic product growth rate China reported in 2019.
Of course there are much better models than China, such as Taiwan, South Korea, Australia and New Zealand. The bottom line is that it’s misleading to speak of a trade-off between a healthy population and a healthy economy. The two go hand in hand.
Happy Fourth of July!
PS. Note that while China was taken by surprise by Covid-19, the US had several months to prepare a response. How did we spend that time?