The COVID-19 pandemic is having an enormous impact on all sectors of the global economy. The disruptions are mainly in seven areas: lives lost, demand, supply, the financial market, labor market, small and medium-sized enterprises that have gone bankrupt, and the global supply chain. While none is easy to deal with, put together, they represent a daunting challenge.

Any policy can only be effective when the pandemic is under control. Failure to prioritize tackling this public health crisis or failure to tame the virus or contain its spread would render any policy useless, monetary and fiscal policies alike. 

All the prevention and control measures have either aggravated the decline in supply through restricting people from work or exasperated the downturn in demand through discouraging consumption. An economic slowdown in the current circumstances is normal and inevitable, and it is where the health, demographic and economic fallouts of the crisis come together.

Some supply chains may never recover from the rupture caused by the pandemic. Were the pandemic to last longer than expected, the post-pandemic economy could see depressed growth in all aspects.

The main takeaway from the above  points is that containment of the epidemic is the overwhelming policy goal in the face of the pandemic, and policies must focus on ensuring survival and people’s livelihoods. 

Therefore, small and medium-sized enterprises and microenterprises must be given the support they need. As main job creators, these companies have an indirect impact on social stability and their importance cannot be overestimated. While many policies aimed at supporting SMEs and microenterprises have been rolled out since the early days of the outbreak, these companies are also in dire need of information, technology, credit, management expertise and talent in order to develop, and support in these areas may be more effective than merely injecting cash.

Second, public initiatives must be promoted that are aimed at ameliorating the fallouts of the pandemic. There have been a lot of discussions about traditional versus new infrastructure in recent days, and we need to be having these conversations. Reduced exports and weak domestic consumption may be drags on the economy for the foreseeable future, leaving investment as the only alternative for growth. Having said that, focusing on investment is not incompatible with the current innovation-driven strategy, as any innovation must start with investment. But to make investment an effective growth strategy, we must answer two questions: What should we invest in, and how will we raise the money?

Decisions over where to invest boil down to a question of priority: Growth first or employment first? For years, China’s approach to economic development has been to prioritize growth, and consequently, it has focused on investing in key infrastructure projects such as roads, railways and airports. China adopted the same approach in response to the global financial crisis of 2008-09. For years, the prevailing theory has been that growth creates jobs, and that as long as the growth targets are attained, employment will be taken care of – not an unreasonable approach when the economy is going through rapid industrialization.

Having said that, once the industrialization process is complete and services make up a greater share of the economy, growth is no longer synonymous with employment. The prevailing trend we are seeing is that while higher employment means faster growth, the opposite is not always true because there can be jobless growth. In light of this, employment has become a priority for China’s economic development and macro-control policies.

During the pandemic, it is important to prioritize jobs in all policy measures, by focusing on helping most companies stay afloat and ensuring a livelihood for the majority of our population. Public initiatives that ameliorate the impacts of the crisis in a broad sense should be the focus of our investment-driven policies.

First of all, infrastructure, especially the so-called new infrastructure which has captured the people’s attention, should be a key investment area, as it has a huge impact on China’s future development and the role of science and technology in our development.

We need to push for land consolidation in accordance with the national strategies of urban-rural integration and rural revitalization. The key here is to rethink conventional approaches to urbanization and build a unified urban-rural land market to galvanize the integrated development of urban and rural areas.

The basic urban infrastructure should be upgraded, starting with public health and epidemic preparedness infrastructure in cities in general, and in megacities and super-megacities in particular. Singapore provides valuable lessons in this regard. It has 889 fever clinics for a population of less than 6 million. By comparison, Shanghai only had 117 fever clinics prior to the coronavirus outbreak for a population of over 20 million. Even though 182 community clinics were quickly added as part of the response to the pandemic, Shanghai only has one-third of the capacity of Singapore. In a densely populated city with dozens of millions of residents, COVID-19 is just one example of the many possible public health and safety risks we may not even know of. To properly respond to these risks, we must act now to upgrade urban infrastructure in quantity and quality. 

Education provision should also be improved in urban and rural areas. In its development report published in 2019, The Changing Nature of Work, the World Bank discussed how technology has changed the face of companies and jobs, making the “gig economy” the new normal. To adapt, countries should pool economic resources and reform their existing educational system to promote lifelong learning. Developing countries in particular should invest in their people with renewed urgency, especially in health and education - the building blocks of future human capital. In these regards, China still has a long way to go.

Li Yang is the chairman of the National Institution for Finance & Development and an academic member of the Chinese Academy of Social Sciences. He contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.