Coronavirus damages the Chinese economy more than expected

A gigantic impact of the coronavirus on the Chinese economy was already expected after two months of paralysis due to the epidemic, but the first data released on Monday exceeded the worst omens. In January and February, industrial production fell 13.5 percent due to the general closure of factories, as announced by the National Bureau of Statistics. Only manufacturing production fell 15.7 percent and investment in the sector plummeted 31.5 percent in this catastrophic start to 2020. Although these first two months are always quite bad due to the pause caused by the holidays of the Lunar New Year, this time it has been added that they were prolonged and it took several weeks for workers to join their posts for controls to stop the spread of the disease. According to the newspaper “South China Morning Post”, the fall is four times greater than what the experts calculated, who had estimated a reduction of 3 percent.

For their part, retail sales sank as much as 20.5 percent because almost all businesses were closed and most of the 1.4 billion Chinese people locked themselves in their homes after the January 23 closure of the province of Hubei and its capital, Wuhan, epicenter of the epidemic. That figure also far exceeds Bloomberg analysts’ forecasts, which were expected to drop 4 percent.

“Total war”
After seven weeks of “total war” against the coronavirus, the big Chinese cities are gradually recovering their normalcy and people have returned to work. But shopping malls are still half-gassed, and entertainment and cultural venues, such as cinemas, theaters and art galleries, continue to be closed for fear that crowds in closed places will cause a resurgence. Different is the aspect that this weekend presented the outdoor terraces in the commercial area of ​​Xintiandi, in Shanghai, very animated by the arrival of good weather and the desire to leave behind these two traumatic months of confinement at home. Of course, temperature controls continue to enter many shops and everyone continues to wear a mask.

Including infrastructure, property, machinery and equipment expenses, investment in fixed assets also contracted up to 24.5 percent, well above the 2 percent forecast.

95% of large Chinese companies have already returned to work and around 60 of SMEs

The Ministry of Industry and Information Technology ensures that 95 percent of China’s large companies and around 60 percent of small and medium-sized companies have returned to work, but a historical contraction for the first quarter is expected . Added to the brutal impact of the last two months is the spread by Europe and the United States of the epidemic, which is progressively stopping the planet. To mitigate the looming economic catastrophe, both the Federal Reserve and the Central Bank of Japan announce zero interest rates and stimulus packages.

“Only by these dates next month we will know the aspect of the Gross Domestic Product of the first quarter. It will mainly depend on the performance of March, since this month it represents around 40 percent of the quarterly economy, while January and February add up to 60 percent, “said the spokesman for the National Bureau of Statistics, Mao Shengyong. SCMP.

While the coronavirus lashes the rest of the world, for China a fight even tougher than against the disease begins: lifting the economy, which was already slowed to its lowest rate since 1990..

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