According to official figures released on Friday, the world’s second-biggest economy contracted 6.8 percent.
The financial toll of the coronavirus on the Chinese economy will be a major concern for other countries. As a major consumer and producer of goods and services, China is an economic powerhouse. This is the first time that China has seen its economy shrink in the first three months of the year since it began recording quarterly figures in 1992.
“The GDP contraction in January-March would lead to a continuous loss of profits, evidenced by insolvencies in Small and medium enterprises and job losses,” said Yue Su at the Intelligence Unit of the Economist.
Last year, in the first quarter, China saw strong economic growth of 6.4 percent, a time when it was caught up in a trade war with the US.
Over the past two decades, China has had an average economic growth of about 9% a year, although the quality of its economic data has been frequently challenged by experts. In the first three months of the year, the economy stopped after significant disturbances and quarantines were imposed in order to avoid virus spread at the end of January.
Economists had expected grim results as a result, but the official data is coming in slightly worse than expected.
Among other main figures reported in Friday’s report:
- Factory performance was down 1.1 percent for March as China gradually resumes production.
- Last month, retail sales plunged 15.8 percent, as many shoppers remained at home.
- In March, unemployment reached 5.9%, marginally better than the all-time high of 6.2% in February.
China has launched a number of financial support programs to mitigate the slowdown effect but not on the same scale as other major economies.
“We don’t anticipate any big stimulus given that this remains unpopular in Beijing. Instead, we think policymakers should tolerate weak growth this year, despite the expectations for a better 2021,” said Louis Kuijs, an Oxford Economics analyst.
Since March, China has been gradually beginning to let factories restart production and allow businesses to reopen, but this is a gradual process of returning to pre-lockdown rates.