Opinion | Coronavirus lessons for China: prioritise health care and quality of life over economic growth

Beijing is on the cusp of the much-delayed annual gathering of the National People’s Congress. The highlight of this event is usually the gross domestic product growth target, but it may not be a scene-stealer this time.

Both the government and the people must change their priorities amid the Covid-19 pandemic. Public opinion surveys around the world show that people prioritise health over the economy. That should and is likely to translate into government budget priorities and people’s consumption patterns. 

There are signs that Chinese people are changing their priorities. Trends in household debt suggest a sharp reduction in the appetite for debt-fuelled expenditure. Between 2014 and 2019, household debt rose at nearly 20 per cent per annum. Unaccounted for debt in the shadow banking system probably rose even faster.

While debt in the official financial system is stalling – even though it is still high, at around 130 per cent of household disposable income – household debt in the shadow banking system may have reduced sharply. The decline in short-term and credit card loans suggests so at least.

The household deleveraging trend is reflected in the purchases of property, cars and smartphones. After crashing in February and March, the recovery in April appears anaemic, still below last year’s level, and not showing any pent-up demand from the shutdown in February and March.