China's economy shrinks 6.8% in 1st-quarter, 1st decline on record

17, Apr. 2020

BEIJING, Kyodo - China's economy marked its first quarterly contraction on record in the first three months of 2020, shrinking 6.8 percent from a year earlier, official data showed Friday, underscoring the damage done by the coronavirus pandemic to the nation dubbed the "world's factory."

In the wake of the outbreak of the new pneumonia-causing virus, China has since early this year been forced to drastically restrict movements of people and goods to prevent further infections, weighing heavily on production, consumer spending and trade across the board.

2.jpg

As the annual meeting of China's national parliament, which was originally scheduled to be convened on March 5 in Beijing, has been postponed, the country's leadership has yet to set a gross domestic product growth target for this year.

China began releasing quarterly GDP figures in 1992.

The virus that causes the respiratory disease COVID-19 was first detected in the central Chinese city of Wuhan, a business and transportation hub with a population of around 11 million. Across the nation, the pace of new infections has decelerated.

China's economy is expected to bottom out in the near future as more companies have resumed normal operations at home, but the pace of recovery may be gradual given that the global economy has faced a serious downturn amid the pandemic, analysts say.

As the pandemic has significantly undermined business activity, the Chinese leadership under President Xi Jinping has stepped up measures to shore up the export-oriented economy, such as providing ample funds to money markets.

"Generally speaking, the overall national economic and social development in the first quarter maintained stable despite the outbreak of COVID-19," China's National Bureau of Statistics said.

The bureau, however, voiced wariness over the future course of the economy, saying, "We are now facing rising pressure of the prevention of imported epidemic infections and new difficulties" as the virus has spread globally, hurting the world economy.

The Communist Party-led government will make efforts to "advance both the prevention and control of the epidemic and the economic and social development," the bureau added.

The International Monetary Fund said this week that China's economic growth is projected to slow to 1.2 percent this year.

During the three months through March, investment in fixed assets, excluding rural households, fell 16.1 percent, and retail sales of consumer goods plunged 19.0 percent.

Industrial production decreased 8.4 percent, while the total value of exports dropped 3.5 percent in the first quarter of 2020.

Chinese GDP in the January-March period totaled 20.65 trillion yuan ($2.92 trillion), according to the bureau.

For the past few years, the world's second-largest economy has lost momentum against a backdrop of a protracted tit-for-tat trade dispute with the United States, which has imposed higher tariffs on a wide range of imports from China.

In 2019, China's economy expanded 6.1 percent from the previous year, but it was the slowest pace since 1990 when the country's economy grew 3.9 percent.

That year, the Chinese economy was hit hard by international sanctions following the military crackdown on pro-democracy protests in Beijing's Tiananmen Square in 1989.

The last time China's economy recorded a full year of economic contraction was 1976, the final year of the 10-year Cultural Revolution initiated by Mao Zedong that pundits say killed tens of millions of people.

The new coronavirus has so far infected more than 2 million people, and fatalities from it have exceeded 140,000, according to a tally kept by Johns Hopkins University. (Kyodo)