China’s economy contracts for the first time on record

For the first time since at least 1992, China’s economy contracted as the COVID-19 pandemic brought economic activity in the country to a halt.

According to data released on April 17 by China’s National Bureau of Statistics, gross domestic product was down 6.8 per cent from the same time during the previous year – slightly worse than the 6.5 percent decline forecast by economists.

China’s economy – the second largest in the world – shrank 9.8 per cent since the final quarter of last year, which was less than the 9.9 per cent decline expected. The economy grew 1.5 per cent in the previous quarter.

It was the first time the economy had contracted in a quarter since 1992, when the government began to release quarterly figures.

Other economic data reported Friday, including investment, consumption and industrial production, also suffered falls. A brighter sign was the smaller-than-expected contraction in March industrial production of 1.1 per cent as factories returned to work amid easing lockdowns.

Hours after the report was released, China’s leaders pledged to deliver more stimulus including interest rate cuts to boost domestic demand, according to China Central Television.

China’s economy hasn’t contracted on a full-year basis since 1976, the year Communist Party Chairman Mao Zedong died.