The scourge of Wuhan Coronavirus has brought the remarkable growth-run of the Chinese economy to an end as China reported the contraction of its economy for the first time since the end of the Cultural Revolution in 1976. Ravaged by the coronavirus outbreak, China’s economy shrank by 6.8 per cent in the first three months of 2020.
On Friday morning, the data released by the Chinese National Bureau of Statistics confirmed the economic decline and shattered the expectations of the analysts who had pegged the economic slump caused due to coronavirus at minus 6 per cent. The data puts an end to China’s unfettered growth that had braved disruptions such as the Tiananmen Square crackdown, SARS epidemic and the 2008 global financial crisis.
Though China started measuring its GDP growth since 1992, the data existing in the public domain suggests that China has not witnessed an economic recession in more than 40 years.
As the world’s second largest economy enforced harsh measures to contain the spread of the coronavirus in the first three months, carrying out extensive shutdown and widespread lockdown, China’s economy was under a severe strain in the month of March, with the industrial sectors, retail and fixed asset investment all contracting dramatically over the decline observed in the first two months of the year.
Industrial production, a barometer for the country’s overall economy, shrunk by 1.1 per cent in March after declining 13.5 per cent over the period of January and February while manufacturing registered a fall of 10.2 per cent, suggesting that even as the outbreak subsides in China, economic woes continue to exacerbate.
Retail sales in China sunk by 15.8 per cent in the last month of the quarter after registering a record drop of 20.5 per cent in the month two months of the year.
The Fixed asset investment, a measure of expenditure over the year to date on items including infrastructure, property, machinery and equipment, collapsed by 16.1 per cent in the first quarter tormented by the menace of coronavirus.
In addition, the value-added of the primary industry diminished by 3.2 per cent, that of the secondary industry by 9.6 per cent and of the tertiary industry by 5.2 per cent.
China had announced earlier this week that its exports had fallen by 6.6 per cent in the first three months of the year.
Meanwhile, the analysts predict that China is set to grow by 1.2 per cent this year, down from the 6.0 per cent growth forecasted by the IMF in January this year.