China’s economy shrank for the first time in decades in the first quarter of the year, as the coronavirus forced factories and businesses to close.
The world’s second-biggest economy contracted 6.8% according to official data published on Friday the 17th of April 2020.
The financial impact the virus had on the Chinese economy will be a huge concern to other countries.
“The GDP contraction in January-March will translate into permanent income losses, reflected in bankruptcies across small companies and job losses,” said Yue Su at the Economist Intelligence Unit.
In the last two decades, China has seen ordinary economic growth of around 9% a year, although experts have frequently questioned the correctness of its economic data.
Key figures published in Friday’s report:
- Factory output was down 1.1% for March as China slowly starts manufacturing again.
- Retail sales plummeted 15.8% last month as many of shoppers stayed at home.
- Unemployment hit 5.9% in March, slightly better than February’s all-time high of 6.2%.
China has revealed a variety of financial support measures to help the impact of the slowdown, but not on the same scale as other major economies. “We don’t expect large stimulus, given that that remains unpopular in Beijing. Instead, we think policymakers will accept low growth this year, given the prospects for a better 2021,” said Louis Kuijs, an analyst with Oxford Economics.
China depends on its factories and manufacturing plants for economic growth, and has been named “the world’s factory”.
Stock markets in the region showed a mixed reaction to the Chinese economic data, with China’s benchmark Shanghai Composite index up 0.9%. Japan’s Nikkei 225 jumped 2.5%, this was largely due to gains on Wall Street after US President Donald Trump unveiled plans to ease lockdowns.