Chinese industry and retail have been hit hard in the first two months of this year by the outbreak of the new corona virus and the disruption of public life in the country.
Figures from the Chinese government published on Monday show that manufacturing output shrank by 13.5 percent year-on-year in January and February. That is the worst contraction in nearly thirty years and a much stronger decline than economists expected. Because of the virus, many factories in China were shut down because staff had to stay at home.
Store sales in China have plummeted by more than 20 percent in the recent period. To combat the outbreak of the virus, shopping centers and catering establishments were closed, as were entertainment options. Many Chinese also stayed at home for fear of the contagious disease.
In addition, unemployment in China has risen to a record level of 6.2 percent, while corporate investment has slumped by a quarter. China, the world’s second economy, is expected to contract in the first quarter due to the damaging impact of the corona virus. That would be the first time since 1989.
“Covid-19 brought the Chinese economy to a halt, from factories to consumer spending. With the virus spreading to virtually all of the world, the global supply and demand chain is being hit, which Chinese manufacturers and exporters will see again in March and April,” said an economist from ING in a comment.
However, it is expected that economic activity in China itself will pick up again cautiously in the near future as a result of Beijing’s measures to contain the virus and stimulate the economy.