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Coronavirus China
This Week in AsiaOpinion
Cary Huang
Cary Huang

Sino File | Coronavirus: for China, the economic pain has only just begun

  • Projections for the first quarter are grim enough, and they don’t even paint the full picture
  • China may look like it has the virus under control, but there will be a sting in the tail of this pandemic

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epa08291466 Members of the Blue Sky Rescue team walk with their equipment after disinfection of a residential area as a precaution against the spread of the coronavirus in Beijing, China, 13 March 2020. The World Health organization (WHO) officially declared the coronavirus outbreak a pandemic on 11 March 2020. EPA-EFE/ROMAN PILIPEY
Cary Huang
OF all the harm the coronavirus has inflicted, it is the effect on human health that is the most tragic and the most visible. But it is the unfolding economic catastrophe that truly marks this out as different from any natural disaster or pandemic in living memory.
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Even now, the final toll can barely be guessed at. Yet some things seem certain already. One of them is that the economy in China, where the novel coronavirus was first identified and which for weeks had been the epicentre of the pandemic before it spread overseas, will sustain damage on a historic scale.

This much was made clear in economic figures released on Monday by China’s National Bureau of Statistics, which showed that the world’s second-largest economy was bucking a decades-long trend of growth to shift into reverse.

All major readings plunged in the January to February period, as economic activity in much of the country came to a halt following the government’s extraordinary measures, including the lockdowns of many cities, to contain the spread of the pandemic. Value-added industrial production plunged 13.5 per cent in the two months, compared with a 6.9 per cent increase in December last year. Fixed asset investment plummeted by 24.5 per cent in the same period, compared with an 11.8 per cent increase in December, while private sector investment fell 26.4 per cent and manufacturing investment dived 31.5 per cent. Retail sales shrank 20.5 per cent, while auto sales contracted by 42 per cent in volume terms and 37 per cent in value terms.

The figures raise the possibility not only that China will record its slowest growth in GDP for the first quarter, but also that it might post its first quarterly economic contraction since records began when data for the January to March period is released in mid-April.

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