Macroscope | China is focused on softening the economic blow of coronavirus, not making a quick recovery

Since China’s recovery trajectory will be shaped by external events, including the effects of the pandemic in its demand markets, Beijing is focusing on domestic priorities like jobs, small companies and loosening financial conditions

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People walk past a worker wiping the window of a clothing shop in Beijing displaying a notice about work resumption and pandemic prevention. Photo: AP

Published: 7:30pm, 24 Apr 2020Updated: 10:25pm, 24 Apr 2020

Amid the global Covid-19 outbreak, China has reported a year-on-year fall in economic output for the first time since 1992, when the National Bureau of Statistics started releasing GDP growth numbers on a quarterly basis.

Real gross domestic product growth in the first quarter declined 6.8 per cent, year on year, worse than market expectations.

The industrial sector was hardest hit by the production suspensions, with a year-on-year decline of 9.6 per cent in value added. Meanwhile, the service industry reported a 5.2 per cent fall in value added due to lockdown measures.

Despite the lacklustre GDP numbers, economic activities have been resuming since early March, as virus transmission is largely under control in China. Since then, improvements have been seen in the monthly indicators, including industrial production, retail sales and fixed-asset investment.

Looking forward, expect to see low single-digit GDP growth on a year-over-year basis in the upcoming quarters as domestic economic activities largely resume. However, the recovery trajectory will be largely driven by developments in the global pandemic and control measures adopted by other countries.