Abstract
On the basis of the demand side and the supply side, the paper respectively analyzed how novel Coronavirus affected Chinese economy: the weak demand caused the demand curve to move to the left, equilibrium output decreased and equilibrium price decreased. Due to the reduction of labor costs, enterprises have the incentive to increase production capacity at the production end. However, when the price is lower than the average variable cost of enterprises, the number of bankruptcies in the society starts to increase. One of the immediate causes of the economic downturn caused by COVID-19, which led to GDP growth of -6.8% in the first quarter of 2020, is a lack of consumption. Therefore, it is suggested that the government can appropriately reduce consumption tax and issue consumption vouchers, to improve consumer confidence and increase output. The ARIMA model was used to predict economic growth for the next seven quarters.
Highlights
Novel Coronavirus epidemic broke out in China at the beginning of 2020
International demand has declined and China's exports have declined .Chinese factories overseas will be adversely affected by shutdowns; Due to the unstable supply chain and logistics caused by the epidemic overseas, relevant important materials in China cannot be supplied in time, which leads to the overstocking of factories and rising storage costs
Consumption voucher will destroy the structure of market economy, make some industries or enterprises that are not in harmony with social development continue to survive in the market, deteriorate the structure of market economy, and reduce the efficiency of market allocation of resources
Summary
Novel Coronavirus epidemic broke out in China at the beginning of 2020. Due to insufficient understanding of virus and rapid flow of people, the virus spread rapidly. The rapid outbreak of the epidemic led the government to restrict social mobility, which directly affected domestic consumption. The pessimistic social expectations led to the decline in investment, and the decline in GDP
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