The effects of COVID-19 epidemic on regional economy and industry in China

Abstract

To scientifically assess the effects of major public health emergencies on economic system, regulate its negative effect and improve the resilience of the economic system is an important national strategic requirement. Currently, the novel coronavirus disease (COVID-19) epidemic has been effectively contained in China, while exogenous and regional risks remain. Systematical identification of influence path and strength of COVID-19 epidemic on economic system has guiding significance for economic system recovery. Based on the improved multi-regional computable general equilibrium model for China, this research measures the output changes in economic system and major industries in China under different COVID-19 epidemic prevention and control scenarios with different changes in factors supply and products demand. The results show that the provincial economic growth in China falls by 0.4%-0.8% compared with the normal situation in 2020, and residential consumption and employment falls by about 2% and 0.7% respectively, while commodity prices rise by about 0.9% in the short term. From the perspective of industrial economy, consumption-oriented and labor-intensive industries are the most adversely affected in the short term. For example, the output value of the service sector will decrease by 6.3% compared with normal levels. Besides, regarding the regional differences of the effects of COVID-19 epidemic on the economic system and industrial economy, Hubei province, as one of the regions with first-level epidemic prevention and control risk, faces the greatest challenge. The effects of COVID-19 epidemic present a spatial spreading pattern with Hubei province as the center. The major industries that suffer from the impacts of COVID-19 epidemic vary in different regions. In addition, this research assesses the intensity of the regional economic recovery under the resumption of work and production scenario and the proactive fiscal policy scenario respectively. The results show that compared with the resumption of work and production, the effect of increasing fiscal stimulus has more potential for economic system recovery, up by 0.3% in GDP and by 1.8% in commodity price, while resumption of work and production has a wider range of spatial pulling effects on industries. © 2021, Science Press. All right reserved.