Two Juggernauts, Two Different Paths to Economic Recovery

A: The need for economic rejuvenation

As we stand in the wake of the economic havoc caused by Covid-19, it becomes clear that the nations of the world must implement economic recovery plans. In the past year, every sector and level of the economy has been affected; you’d be hard-pressed to find any business that has not, in some way, been impacted by the pandemic. Even large brands haven’t been spared; J.Crew, J.C. Penney, and Hertz have all been driven to bankruptcy. Encouraged by the rebounding of markets as the global vaccine roll-out has picked up steam, the world’s two largest economies, the USA and China, have been developing recuperation plans. Before we can understand them fully, however, we must analyse the impact of the pandemic on the global economy.

B: The unemployment crisis

The most glaring economic consequence of the global pandemic has been the magnitude of unemployment it has induced. Even the economic hegemon of our time, the United States, has seen a drastic increase in unemployment since the onset of the pandemic. In 2019, its unemployment rate stood at 3.68%. By May 2021, it had hit a sky-high 13%. And to think that this happened to the largest economy in the world.

Curiously, although China’s unemployment rate has also seen a surge since the advent of the pandemic, it hasn’t increased nearly as much as the United States. In 2019, China’s unemployment rate was also 3.68%. By 2021, it had only climbed to 3.86%, a demonstrably smaller incline than its global counterpart.

C: Why the two greatest economies in the world have different plans

The two largest economies in the world were impacted very differently by the global crisis. China and America have extremely different political and social systems, which has naturally resulted in varied reactions to the pandemic. As they have distinctive ways of life, it is self-evident that there will be great differences between the two plans.

D: What is the US plan to recover the economy?

Though the American recovery plan aims to stimulate every level of society, per the values of the governing Democratic party, the plan is mostly geared to help those of lower-income. This focus is epitomized by one of its central goals: to cut child poverty by 50%. They aim to do this through tax relief for those from lower-income backgrounds - on the whole, the plan will invest 1 trillion US dollars in the pursuit of unemployment relief, child poverty relief, and small-business growth.

E: What is China’s plan to recover the economy?

China means to recover from the pandemic by ensuring that its economic output continues on its path of incredible growth, just as before. China’s economic recovery plan has been in effect since February of 2020, and has proven to be a pleasant surprise; the Chinese GDP saw a 2.3% growth over the past year, one of the few economies to do so. Thoroughly encouraged by their relative success, the Chinese government is fiercely optimistic, forecasting a GDP growth of between 9.3% to 9.5% by 2022. To achieve this, the Chinese government is planning to extend generous loans to small businesses.

Another ambitious plan for development lies in the government’s desire to support innovation. More specifically, the government has outlined plans to invest in new technologies across the construction, environmental and digital equipment sectors among others. For now, the question remains: Can the Chinese government sustain the country’s growth, even as new variants spread? Only time will tell.

As demonstrated in this article, both the United States of America and China have developed different plans for recovery. These differences are a product of culture, history and philosophy. While China has been more successful thus far, the long-term success of these two economic juggernauts has yet to be seen.