By Sun Zhiyan, Department of Development Strategy and Regional Economy, DRC

Research Report, No.89, 2021 (Total 6154) 2021-4-19

Abstract: China has taken the lead in economic recovery in the post-epidemic era while is still faced with risks brought by the impact of COVID-19 epidemic in the mid- and long-term. To prevent and resolve these risks requires efforts to focus on China’s long-term strategic needs for high-quality development and to combine the risk resolution efforts with the capacity-building in our sustainable development. To this end, this paper has offered the following policy options. First, regional policies need to be brought into bigger play to strengthen the endogenous driving forces and stability of China’s economic development so as to effectively prevent the financial and technological risks brought by the larger scale of fiscal and monetary policies that developed economies adopt in the post-epidemic era. Secondly, work needs to be done to accelerate the establishment of a social security system covering wider range in line with the employment trend in the post-epidemic era by setting up emergency social assistance mechanism and employment insurance system as soon as possible for people with mid- and low income with the aim of preventing the income gap from further widening. Apart from giving full play to the role of fiscal leverage in the economic recovery, efforts are needed to optimize investment structure for more inclusive and sustainable growth and to proactively explore ways to utilize new financial instruments like carbon trading and green finance to relieve the debt risks in less-developed regions.

Keywords: financial risks, income gap, inclusive growth