Dear Premier Li:
The COVID-19 pandemic has unleashed an unprecedented global economic, social and health crisis. The human toll is huge and continues to grow, with more than 50 million infections and over 1.5 million deaths to date.
Global GDP will decline by around 4.5 per cent in 2020, the largest annual fall in output since the Second World War. The OECD’s September Interim Economic Outlook projected a rebound of 5% in 2021, but that was before the recent surge in COVID‑19 cases, particularly in Europe, and the reimposition of strict containment measures. Even given recent positive news on vaccines, global growth next year looks likely to be somewhat weaker than we thought in September.
China is expected to be the only major economy that will achieve positive growth in 2020.. Gaining rapid control over COVID-19 has facilitated the resumption of production and implementation of infrastructure stimulus, strengthening demand in a wide range of industries.
While China’s growth in 2021 will be unusually strong – around 8% – due to the low base this year, in 2022 it is expected to ease to about 5% as the economy returns to its pre‑COVID-19 path.
To make China’s recovery more inclusive and sustainable, rebalancing from investment to consumption should continue. Stronger social protection and a more equitable distribution of high-quality public services, including for migrant workers, would accelerate urbanisation, which, according to our estimates, could boost consumption by around 8% in the medium‑term.
COVID-19 arrived at an already difficult time for the global economy. We were already experiencing weak productivity growth; serious trade, investment and geopolitical tensions; increasing inequalities; as well as climate change and biodiversity loss.
Our collective rebuilding efforts must focus on a strong, green, inclusive and resilient recovery in line with the Sustainable Development Goals. While containing the virus is our top short-term objective, we have an opportunity, and a duty, to “build back better”. Let me highlight some key priorities:
First, rebooting our economies by leveraging the enormous resources that have been invested in the global response. This means investing in green infrastructure, transport and housing, as well as much-needed digital upgrades for SMEs. We also need to redouble our efforts to foster open trade and investment, including by addressing the kinks in the global supply chains of essential goods highlighted by the COVID-19 pandemic.
Second, taking decisive action to address the climate crisis. This is our single most important intergenerational responsibility. It’s high time we put a price on all sources of carbon emissions, and eliminate harmful subsidies for fossil fuels and intensive animal agriculture. China’s decision to go carbon-neutral in 2060 was great news. Taking action on rising greenhouse gas emissions, air and water pollution, biodiversity loss, and inefficient resource allocation can also help jumpstart economic growth and enhance our resilience to future shocks. If the international community uses its full renewable energy potential, energy sector employment could reach 100 million by 2050, up from around 58 million today.
Third, tackling inequalities. The COVID-19 crisis has disproportionately affected those at the lower end of the income distribution, as well as women, children and youth, migrants, the low-skilled, the elderly, and people with disabilities. Inequalities – of incomes and opportunities – can no longer be treated as an afterthought. We must work together with social partners, adapting skills, and focusing on youth-responsive policies and services. And we need to assess and understand the distributional impact of our policies better.
Finally, strengthening multilateral co-operation to address systemic challenges and improve the resilience of our economies. The OECD has been on the frontlines of the global response to the COVID-19 crisis, contributing multidisciplinary analysis, data and insights through our COVID-19 Hub (160 policy briefs so far); and convening high-level dialogue through our Ministerial Council Roundtables and our 2020 Ministerial Council Meeting. We are also leading efforts to address systemic global challenges, which includes our work for the G20 to deliver a global, consensus‑based solution to the tax challenges of the digital economy.
China’s experience and role in the global recovery is a source of hope and confidence. By working together, by sharing lessons learned, knowledge and insights, we can achieve a strong, green, inclusive and resilient recovery.
The OECD is proud to work with China as a Key Partner. You can continue to count on our support to design, develop and deliver, better policies for better lives.