China’s Economy Shrinks for the First Time in Decades Due to COVID-19 Virus-Hit
China’s Coronavirus crisis has tipped its economy into its first decline for the first time in decades. Raising pressure on authorities to prop up growth as mounting job losses, thereby threaten social stability.
Amidst these pressures include the President of the United States of America, Donald Trump, claiming that the origin of the COVID-19 pandemic is related to the Wuhan laboratory, which is the city where the virus was first reported late last year.
The Russian President, Vladimir Putin, on a phone call with the Chinese President, Xi Jinping, on Thursday night reaffirm mutual support in the fight against COVID-19 and also rejecting politicization of the pandemic.
However, China has revised its official death toll from the coronavirus pandemic, raising the number of fatalities by more than a third.
The total number of cases recorded in the Wuhan city now stands at 50,333 with 3,869 deaths which marks a 50% increase in the number of deaths from coronavirus, said Officials in Wuhan.
In the last two decades, although experts have regularly questioned the accuracy, China has seen an average economic growth of around 9% a year.
Now, China – the world’s second-largest economy – contracted 6.8% according to official data released on Friday. Contrary to last year when it saw healthy economic growth of 6.4% in the first quarter, which was a period when it was locked in a trade war with the US.
Although economists had expected bleak figures when China’s economy had come to a halt during the first three months of the year as it introduced large-scale shutdowns and quarantines to prevent the virus spread in late January. Still, the official data comes in slightly worse than expected.
Among other key figures released in the report are:
- The factory output was down 1.1% for March as China slowly starts manufacturing again.
- Retail sales plummeted 15.8% last month as many shoppers stayed at home.
- Unemployment hit 5.9% in March, slightly better than February’s all-time high of 6.2%.
The financial toll the coronavirus is having on the Chinese economy will be a massive concern to other countries as China is an economic powerhouse.
Even though China has slowly started letting factories resume production and letting businesses reopen, but this is often a gradual process to return to pre-lockdown levels.
China relies heavily on its factories and manufacturing plants for economic process and has been dubbed “the world’s factory.”
China has unveiled a variety of monetary support measures to cushion the impact of the slowdown, but not on an equivalent scale as other major economies.
Louis Kuijs, an analyst with Oxford Economics, said:
“We don’t expect large stimulus, given that, that remains unpopular in Beijing. Instead, we think policymakers will accept low growth this year, given the prospects for a far better 2021.”
However, this is the first time the Chinese have seen its economy shrink in the first three months of the year since its quarterly figures in 1992.