China's economy shrinks as coronavirus hits world trade
China’s economy shrank 6.8% in the first three months of 2020, the country’s first such contraction on record and a stark sign of the financial impact of the coronavirus pandemic.
The news came as Chinese authorities revised the death toll in Wuhan, the hardest-hit city and where the virus first emerged, up by 50%, to 3,869 from 2,579.
The economic contraction, reported by China’s National Bureau of Statistics on Friday, comes after months of paralysis as the country went into lockdown to contain the virus, which emerged in central Hubei province in December. It has infected more than 2 million people globally and killed more than 140,000.
While much of the rest of the world grapples with the virus, China appears to have overcome the worst of it. On
Friday, it reported 26 new confirmed cases, the lowest daily total in two weeks.
Overall China has reported more than 3,000 deaths and 80,000 infections from the coronavirus. Even as
Chinese authorities over the past month have pushed to restart the economy, fears of new infections have forced some parts of the country to enact new restrictions. China has closed its borders to almost all foreigners arriving from abroad and limited international flights.
Depressed demand from overseas is likely to hit the Chinese economy further. China’s first-quarter contraction follows declines in 2019, when the Chinese economy expanded at its slowest pace in almost 30 years – the result of slowing consumption, a pullback on debt-fuelled growth and a protracted trade war with the US.
Analysts polled by Reuters estimate China’s yearly growth for 2020 will slow to 2.5% from 6.1% last year, the weakest pace since the last year of the Cultural Revolution.
Friday’s data showed that industrial output fell by 1.1% in March, a better-than- expected drop. Retail sales, a measure of consumption, fell 15.8%, steeper than predicted, while fixed asset investment, a gauge of spending on infrastructure projects, equipment and property, fell 16% in line with expectations.
On Friday, Germany’s health minister said the spread of the virus had become “controllable” as the number of infections sank to a new low, while Malaysia also reported its lowest daily increase since March, of 69 new cases. In Spain, the daily death toll was 585 on Friday, down from previous peaks of more than 900 in a day. Denmark said it would allow more businesses to open next week as restrictions are lifted, while the US announced a plan to reopen US states in phases.
The French president, Emmanuel Macron, on Thursday described the pandemic as a “profound anthropological shock”. He told the Financial Times: “We have stopped half the planet to save lives, there are no precedents for that in our history. But it will change the nature of globalisation, with
which we have lived for the past 40 years.”
Other developments in the coronavirus pandemic included:
Donald Trump unveiled a set of guidelines for reopening the US economy, comprising of three phases but ultimately deferred to governors on when and how to return the states to normal.
New Zealand recorded its lowest ever number of coronavirus cases, with only eight people found to be infected.
The UN warned the pandemic risked turning into a child rights crisis.
A third Japanese cabinet official tested positive for the virus, after the country expanded its state of emergency. India banned the use of the Zoom video conferencing app in government meetings, amid concerns about security.