The coronavirus outbreak might be nearly over in China,
China reported today a 6.8% drop in gross domestic product (GDP) for the first quarter of 2020 compared with the same period last year. Even as life has started going back to normal in most of China, the road ahead for its economy still looks challenging.To get more Shanghai economy news, you can visit shine news official website.
It’s the first economic contraction for the country, once dubbed the world’s growth engine, since at least 1992, when Beijing started releasing quarterly GDP figures. Other estimates suggest that it is the first negative quarter China has had since 1976, which marked the end of the decade-long Cultural Revolution that pushed the Chinese economy to the edge of collapse.
China also reported a slew of other key economic data, which look equally grim. Retail sales, which declined by 20.5% on-year for January and February, decreased by 15.8% in March from a year ago. Fixed-asset investment outside rural households, which reflects construction activity, as well as industrial output, an important indicator for measuring economic performance, extended their losing streak from the first two months to drop 16.1% and 1.1% in March from the previous year, according to China’s National Bureau of Statistics.
The historic slump, mainly caused by China’s lockdowns of cities to contain the epidemic, first spotted in its central city Wuhan, lays bare what to expect even after relatively successful containment of the virus. While China is gradually re-emerging from the crisis, countries like the US and Italy are repeating some of the worst nightmares China had in the early days of the outbreak, news of which was reportedly suppressed by Beijing initially. China now accounts for only 4% of the over 2 million confirmed coronavirus cases worldwide, compared with 32% for the US.
Global economic forecasts have also become increasingly pessimistic in recent weeks. The International Monetary Fund said the virus could cause the worst global recession since the Great Depression in the 1930s, while the unemployment rate in the US could reach 20% as soon as next month, according to a note from JPMorgan.
Although China could provide some indication of what’s in store for other countries as they try to restart commerce, the lessons that can be learned from how the world’s second-biggest economy tries to revive its economy are limited-its political and cultural structures are much different than those in the West, and there have long been doubts about the veracity of its economic data. China’s one-party state also means it can deploy measures on a much larger scale, and much faster than other political systems.
Still, one takeaway is the rebound could be more gradual and less V-shaped than some economists had hoped, say analysts. “China’s Q2 GDP, while could be better than Q1, should still see a negative growth year-on-year. This is partly because of the sluggish global demand caused by the virus, leading to canceled orders for many Chinese factories,” said Raymond Yeung, chief China economist at Australia & New Zealand Banking Group in Hong Kong. Another factor that complicates the recovery process is the changing dynamic in international relations. “After the outbreak, the trade relations between China and other countries could get worse, posing a bigger challenge for Beijing,” he added.