April 18, 2020

China’s Economy Shrinks, Ending a Nearly Half-Century of Growth

The coronavirus outbreak has brought China’s extraordinary, nearly half-century-long run of growth to an end — a stark reminder of the enormous task ahead for world leaders trying to restart the global economy.To get more China economy news, you can visit shine news official website.

Chinese officials on Friday said that the world’s second-largest economy shrank 6.8 percent in the first three months of the year compared with a year ago, ending a streak of untrammeled growth that survived the Tiananmen Square crackdown, the SARS epidemic and even the global financial crisis. The data reflects China’s drastic efforts to stamp out the coronavirus, which included shutting down most factories and offices in January and February as the outbreak sickened tens of thousands of people.

The stark numbers make clear how monumental the challenge of getting the global economy back on its feet will be. Since it emerged from abject poverty and isolation more than 40 years ago, China has become perhaps the world’s single most important growth engine, one that lifted fortunes during previous times of trouble, like the financial crisis.

Now China is trying to restart its vast, $14 trillion economy, an effort that could give the rest of the world a much-needed shot in the arm. The coronavirus’s spread to the United States and Europe, which froze the economies there, has led to forecasts that the world’s output could shrink far more this year than it did even during the financial crisis.
That global halt will, conversely, hurt China’s efforts to get back on track, creating a difficult economic puzzle for top leaders in Beijing. The pandemic and attempts to contain it have sharply cut the world’s appetite for China’s goods, which could lead to factory shutdowns and worker furloughs even as the country tries to get back to business.

China has gradually lifted many of its limits on work and travel in recent weeks. But businesspeople across China say that times remain difficult. Families say their incomes have fallen.

"This year is difficult — some have lost their jobs, some cannot find work to do,” said Liu Xia, a fruit vendor from a village on the northern outskirts of Beijing. "Those who do go to work and those who are still in business are greatly affected.”

The contraction, announced on Friday morning in Beijing by China’s National Bureau of Statistics, is the first economic shrinkage acknowledged in official statistics since 1976, when the country was in the final days of the Cultural Revolution, a national spasm of urban violence and torture.
China’s historic growth streak was fueled by the creation of an extensive, modern network of highways and railways, the strong entrepreneurship of its people, its skilled work force and a government that was willing to set environmental and labor concerns aside for the sake of ever-greater economic output. But those factors were no match for the coronavirus, which, after it first emerged from the city of Wuhan in late December, ground the country’s huge engine of industry to a virtual halt.
Beijing’s options are limited. It has so far avoided unfurling a huge spending package like leaders in the United States and Europe have done. Its economy has become too big and complex to easily restart like it did in 2008, when it unveiled a plan to spend more than half a trillion dollars. Years of easy lending have also left local governments and state-run companies mired in debt.

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