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China’s economy shrinks for first time in decades

China’s economy shrank for the first time in decades in the first quarter, as the coronavirus outbreak brought production and spending to a standstill.

Official data shows the world’s second largest economy suffered a sharp downturn of 6.8% between January and March, when factories, shops and travel were shut down in a bid to contain the COVID-19 infection.

Although slightly larger than the decline forecast by analysts it was broadly in line with expectations and markets were up in Asia, which seemed more focused on Donald Trump’s plan to reopen the US economy in the face of the coronavirus crisis.

China, where the outbreak originated, declared victory over the virus in early March and started reopening factories and offices even as other countries tightened controls.

But analysts say Beijing faces an uphill battle to revive growth as the global pandemic devastates demand from major trading partners and dampens domestic consumption.

Lu Zhengwei, Shanghai-based chief economist at Industrial Bank, said the latest Gross Domestic Product (GDP) data reflected “the toll from the economic standstill when the whole society was on lockdown”.

He added: “Over the next phase, the lack of overall demand is of concern.

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 GDP data reflected “the toll from the economic standstill when the whole society was on lockdown”.

Ken Uwotu

Senior Care Consultant

 

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