China's Economy Retreats, With Pandemic Causing Biggest GDP Drop In Decades

[freemexy]

China's Economy Retreats, With Pandemic Causing Biggest GDP Drop In Decades

China's economy contracted by 6.8% in the first three months of 2020 from the same period a year ago — its biggest drop in nearly three decades, as the country's factory output and domestic spending ground to a halt amid the unprecedented shock of the coronavirus pandemic.To get more economy news today, you can visit shine news official website.

Data from the National Bureau of Statistics of China on Friday showed that industrial output was down 8.4% from the year before and retail sales fell by a whopping 19% as the country has been on lockdown for weeks in an effort to contain the spread of the virus.

The sharp drop-off in first-quarter gross domestic product, the biggest since China began sharing quarterly economic data in 1992, represents a 9.8% contraction over the final three months of 2019. The country hasn't recorded an economic contraction in any of its official statistics since 1976, the year it exited the Cultural Revolution, a bloody decade of political turmoil.

In the more than four decades since, China blazed a path of explosive — some would say reckless — economic growth, transforming itself from a largely rural, agrarian country into an urban manufacturing power that has risen to become the world's second-largest economy.

The potentially deadly coronavirus was first discovered in the central Chinese city of Wuhan in December and quickly spread to the rest of the country before spilling over its borders and, in a matter of weeks, making its way across the globe. While China was the early epicenter of the disease, aggressive action to isolate its population, first in Wuhan and then across the country, helped tamp down the disease, even as Beijing was accused of covering up the extent of its outbreak.

For nearly two months, China imposed severe lockdown measures on more than 700 million of its residents in a desperate bid to slow down the spread of the new virus. Although it has slowly begun to crank up its economy as quarantines are lifted and infections appear to be tailing off, the rest of the world is still battling COVID-19, devastating global trade and causing consumption of products made in China to plummet.

China's contraction is likely a harbinger of the painful economic reopening that other countries must face, such as the United States, which are grappling with surging unemployment after shutting down their economies in a bid to stem the spread of the virus.

The steep decline in growth will also almost certainly force China's ruling Communist Party to abandon an important political milestone: the doubling of annual GDP from 2010 to the end of 2020.

"They could [reach this target], but they would have to unleash so much useless spending and such a big surge in debt, that I think even [China's leaders] agree it makes no sense," said Michael Pettis, a finance professor at Beijing's Peking University.