CHINA went from boom to bust amid the coronavirus crisis as the outbreak brought their near-50 year economic boom to a crippling halt.
The world’s second-largest economy shrank by 6.8 percent from a year ago just months after the first COVID-19 case emerged in the city of Wuhan and spread all over the world.
It marks China’s worst performance since before market-style economic reforms started in 1979 as factories, shops and travel were shut down to contain the deadly bug.
It’s certainly a blow to global companies who hoped China would power the world economy out of its most painful slump since the 1930s.
Although some forecasters thought the communist nation may rebound, they’ve been cutting growth forecasts and pushing back recovery timelines as negative trade, retail sales and other data mount.
“I don’t think we will see a real recovery until the fourth quarter or the end of the year,” said economist Zhu Zhenxin at the Rushi Finance Institute in Beijing.
Retail spending – which accounted for 80 percent of China’s economic growth last year – plunged 19 percent in the first quarter from a year earlier.
Investment in factories and other fixed assets, the other major growth driver, plummeted by 16.1 percent amid the ongoing crisis, which has resulted in millions of deaths and infection all over the world.
While the US and Europe tightened control in early March, China’s ruling Communist Party claimed they had triumphed over the virus by reopening factories and offices.
Cinemas, hair salons and other businesses which employ millions of people are still closed while tourism struggles with most foreigners being barred from entering.
The country has also received some bad press over the last few months, with President Trump saying they covered up the virus and were in cahoots with the World Health Organization (WHO).
Reports have since emerged that the vicious virus was manufactured in a Wuhan lab in an effort to prove China’s dominance over the US in fighting diseases.
When Trump was asked on Wednesday about the extraordinary claims, he said: “More and more we’re hearing the story.
“And we’ll see. When you say ‘multiple sources’ – now there’s a case where you can use the word ‘sources.’
“But we are doing a very thorough examination of this horrible situation that happened.”
Although the Chinese government has tried to entice people with shopping vouchers in some cities and launching a media campaign for eating out, retail has been hard-hit.
The ruling party appealed to companies to keep paying their workers, urging them to avoid layoffs.
Despite tax breaks and loans to help entrepreneurs, a wave of bankruptcies has flooded the job market.
Car sales sank 48.4 percent from a year earlier in March, which was better than Februarys record 81.7 percent plunge, which tops off a 2-year-old decline that already was squeezing global and Chinese automakers in the industry’s biggest global market.
Exports declined 6.6 percent in March from a year ago.
Forecasters warn exporters likely face another downturn as the fight against the virus depresses US and European consumer demand and say China will have little to no economic growth this year.
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Chinese leaders probably will adopt stimulus measures at least as big as their response to the 2008 crisis but will emphasize quality instead of quantity, said Zhu at the Rushi Finance Institute.
He said money was likely to go to technology development and social welfare instead of construction, as it did in 2008.
Last years economic growth sank to a multi-decade low of 6.1 percent under pressure from weak consumer demand and a tariff war with Trump that depressed exports.
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