A tale of two recoveries: uncovering the imbalance between state-driven production and private consumption in post-pandemic Wuhan, China

Abstract

The world's first epicentre of Covid-19 that contained the virus early and recovered quickly, Wuhan, the capital city of China's Hubei province, offers a rare case for examining the effective but unbalanced role of the Chinese state in recovering a post-Covid city against a continued zero-Covid policy. Due to institutional inertia in policy-making, Wuhan has experienced a two-track recovery of (i) rapid GDP growth from infrastructure investment fuelled by government stimuli and large state-owned enterprises, and (ii) a weak recovery for small private businesses and grassroots consumption. Combining analyses of city-level data and survey/interview information, this paper examines the unbalanced role of the Chinese state in producing Wuhan's uneven two-track economic recovery and its implications for recalibrating the roles of the central versus local governments and empowering the latter to rebalance from production to consumption and to improve livelihood.