On April 29, 2022, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and work in China, and made a series of major decisions centering around achieving the set goals of economic and social development for the whole year. At the meeting of the Standing Committee of the Political Bureau of the CPC Central Committee held on May 5, it was stressed that China has won the battle against the COVID-19 pandemic in Wuhan and will definitely win the decisive victory in the current fight against the outbreaks in Shanghai.

To win the decisive battle against the pandemic in Shanghai, we must adhere to the general principle of “putting the people and their health first”, the general strategy of “guarding against imported cases and a rebound in indigenous cases” and the general policy of “dynamic zero-COVID” and take swifter, more targeted and more refined prevention and control measures, so as to safeguard economic and social recovery and development. Epidemic prevention is a “task of paramount importance” for the country, and the general policy of "dynamic zero-COVID" is not to pursue zero infection, but to control the pandemic in the shortest time at the lowest social cost and maximally ensure the people's health and the normal order of production and life. The COVID-19 pandemic has brought serious challenges to the economic and social development of the world. It is precisely because China has persistently adhered to the general policy of "dynamic zero-COVID" that it has been able to resume production quickly and minimize the impact of the pandemic on economic and social development in the past two years or so. Under the unified leadership of the CPC Central Committee, China was the first to bring the pandemic under control and became the only major economy in the world to achieve positive economic growth in 2020. The country was also the first to share anti-epidemic information with and provide anti-epidemic materials, vaccines and medical expert teams to other countries. In 2021, China's GDP grew by 8.1% over the previous year. The domestic cycle played a particularly bigger role, with domestic demand contributing to 79.1% of the economic growth. At the same time, efforts to stimulate domestic demand and endeavors to expand overseas demand promoted each other. In 2021, China's gross goods import and export volume hit a record high, with a year-on-year increase of more than 20%, which contributed to the security of global supply and industrial chains. 

To win the decisive battle against the pandemic in Shanghai, we need to continuously adjust prevention and control measures according to the actual situation, proactively respond to changes in the international and domestic scenes, restore the order of social production and life step by step, and ensure the security and stability of industrial and supply chains. Characterized by short incubation, stealthy transmission and high contagious power, the Omicron virus can easily break out at sporadic points or in clusters. As a result, epidemic prevention and control in 2022 is much more complex than we have thought. Especially for an international metropolis like Shanghai which has a large population and high population density, it is more difficult to continuously adjust prevention and control measures according to specific situations and effectively coordinate the relationship between anti-epidemic prevention and control and economic and social development. Needless to say, the tasks are tough and challenging.

In the short term, the COVID-induced "lockdowns" have had a huge impact on Shanghai's economy and society. There is a particularly urgent need to implement a policy package to stabilize market entities, especially numerous micro, small and medium-sized enterprises and individual businesses which have a weak ability to withstand risks. The current resurgence in COVID infections in Shanghai is a sudden outbreak, and most enterprises in Shanghai do not have enough time to formulate contingency plans. In particular, compared with the situation in 2020, enterprises are facing the superposition of three peaks: production peak, labor use peak, and business activity peak. Consequently, huge losses have been caused to most small and medium-sized enterprises. At the start of the pandemic, there were temporary rises in raw material prices. Because micro, small and medium-sized enterprises are mostly in the midstream and downstream of industries, rising raw material prices in the upstream have further increased their cost pressure. At the same time, sluggish demand due to the pandemic further squeezes the profit space of small and medium-sized enterprises in the downstream. Repeated outbreaks of the pandemic have caused operational difficulties to the life service industry which relies on “face-to-face contact” with customers, while putting a large number of micro, small and medium-sized enterprises and individual businesses on the brink of closure.

Currently, there is a need to unswervingly adhere to the general policy of "dynamic zero-COVID", promote enterprises to resume production in a scientific and targeted manner, help market entities to build up confidence in early work and production resumption, and minimize the impact of the pandemic on economic and social development. In particular, we should put through the "last mile" in the implementation of various enterprise support policies. Firstly, relevant government departments need to inform entrepreneurs of the implementation procedures, time nodes and scope of eligibility of the enterprise support policies in a concise, clear and accurate online way through standardized processes. Secondly, given that most government departments have dispatched most of their staff to the front line of anti-epidemic work, it is suggested that advance application, prompt policy release through effective information channels and automatic completion of application procedures online should be adopted to optimize the procedures. Thirdly, various departments may open special policy consultation hotlines to answer questions from enterprises. In addition, for some policy-insensitive enterprises, neighborhood chambers of commerce and other grassroots service agencies may be mobilized to reach out and encourage businesses to proactively apply for policy benefits and get relevant coaching. At the same time, tax relief and other policies may allow the practice of implementation first and approval later, so as to reduce the pressure that enterprises face when going through lengthy application formalities.

Opportunity and crisis always go hand in hand. The current outbreaks will further "force" Shanghai to make industrial upgrading. In the post-COVID era, Shanghai should adapt to the new trend of industrial change and provide stronger drivers for economic development.

Shanghai accounts for more than 20% of China’s IC industry and 1/4 of China’s STAR-listed biomedical companies. This city is home to more than 1150 key AI enterprises. These are iconic sectors behind Shanghai’s high-quality industrial development and also core industries leading China’s participation in global competition. In 2021, despite shortages of chips, workers and orders and rising costs of labor, logistics, raw materials and energy, Shanghai still made a historic breakthrough in economic growth and industrial development, with its GDP hitting RMB4,321.485 billion, passing the RMB 4 trillion mark for the first time and continuing to take the top spot among cities in China. The output value of IC, biomedicine and AI, which are Shanghai’s three major manufacturing industries, grew by 18.3%, showing strong resilience. An external environment characterized by the short-term impact of the pandemic, the China-US trade spat, a turbulent international situation and the reshuffling of the global industrial chain provides new opportunities for key industries in the Shanghai-led Yangtze River Delta region to participate in global competition. 

First, strengthening the construction of new infrastructure. The COVID-19 pandemic is the most serious sudden outbreak of crisis since the end of the cold war. The negative economic impact of the recent outbreaks in Shanghai is self-evident. It also exposes the nature and importance of health, logistics and ICT as strategic industries. Shanghai should well leverage the huge domestic market and wide global connectivity, further focus on the development of digital economy, green and low-carbon sectors, intensify infrastructure construction, and generate new growth drivers for new industries. 

Second, making breakthroughs in new consumption. Consumption is the primary force driving the economy and plays the key underlying role of a "ballast" and "new engine" in post-COVID economic growth. Once the pandemic is over, Shanghai should give full play to the agglomeration advantages of online new economy platforms, accelerate the deep integration of new consumption, new services and new manufacturing, expedite the formation of new products, new business formats and new markets, speed up the cultivation of new forces for growth, and drive the synchronous upgrading of consumption and manufacturing in the Yangtze River Delta region. 

Third, making further innovations in the business environment. The primary competitiveness of a city lies in its "soft environment" for doing business. We should fully leverage the demonstrative and leading role of the China (Shanghai) Pilot Free Trade Zone and Pudong New Area, make comprehensive planning for economic, social, cultural, commercial, ecological and urban governance, break through the constraints of finance, digital flow, talented minds, space and other factors, build tailored business environments for new industries and carry out pilot work. 

Epidemic prevention and control is all about the safety of lives, while development determines the wellbeing of the people. How to effectively coordinate this seemingly irreconcilable contradictions is a difficult issue facing all countries in the world. General Secretary Xi Jinping has pointed out that the COVID-19 pandemic will inevitably have a fairly big economic and social impact. In such a situation, there is a greater need for us to look at China's development from a comprehensive, dialectical and long-term perspective and strengthen our confidence. The prevention and control of the COVID-19 pandemic will largely determine the normalization of social and economic activities. Moreover, as major Western countries choose to lift all their epidemic control measures, it will pose a huge challenge to China's epidemic prevention and control model and produce a huge impact on the internal and external operational logic behind China's macroeconomy. Effectively coordinating the relationship between anti-epidemic work and economic and social development is an accurate judgment and a scientific decision made by the CPC Central Committee with Comrade Xi Jining as the core in the face of the new trend and characteristics of the spread and mutation of the COVID-19 virus and in light of the new background and challenge of the significantly increased complexity, severity and uncertainties of China’s economic development environment. It is also a fundamental safeguard for winning the decisive battle against the pandemic in Shanghai.



Tang Yunyi, Deputy Director and Researcher Professor of the Institute of Applied Economics of Shanghai Academy of Social Sciences

Vice President of Shanghai Public Policy Research Society