From January to March 2020, the Chinese economy declined immediately by 6.8% compared to the same period in 2019. On Friday, April 17, reported the State Statistical Office of China.

The decline in the GDP of the Asian republic occurred for the first time since the beginning of official statistics - since 1992. Meanwhile, according to experts surveyed by RT, the last time the Chinese economy showed negative dynamics back in 1976.

“By the mid-1970s, the PRC was in a rather difficult situation due to the erroneous program of the Great Leap Forward. The initiative implied a sharp development of the economy due to the modernization of production, but ultimately turned into a failure and led to stagnation. The situation worsened after the death of Mao Zedong in 1976. Then the struggle for power began, which was accompanied by protests, unrest, a halt in production and rising unemployment, ”Vyacheslav Abramov, director of the BCS Broker sales office, told RT.

According to the head of the School of Oriental Studies at the Higher School of Economics, Alexei Maslov, a marked acceleration of the PRC economy began only in 1979 after the introduction of a package of government reforms. Moreover, since 1992, the country's GDP growth rate has continuously remained above 6%.

The first in recent decades, the collapse of the Chinese economy, experts explain the consequences of the coronavirus epidemic. Recall that the COVID-19 flash was first recorded in the Chinese city of Wuhan at the end of December 2019. As a result of the rapid spread of infection in the country, strict quarantine measures were introduced - a ban on mass events, suspension of enterprises, as well as restrictions on the free movement of citizens.

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The situation led to a sharp decline in trade, production and passenger traffic. So, according to official data, in the first quarter of China's industry collapsed by 8.4%, retail sales - by 19%, and investment in fixed assets - by 16.1%.

“In the first three months of 2020, business activity in China was paralyzed due to strict quarantine measures: factories, shops, restaurants and leisure centers were closed. The majority of territories and more than half of the population switched to self-isolation. However, a recovery trend has already been outlined, ”Gennady Nikolaev, an expert at the Academy of Financial and Investment Management, told RT. 

In total, since the end of December 2019, more than 84 thousand cases of infection have been recorded in the PRC. Such data are provided by the World Health Organization (WHO).

Meanwhile, at the end of March, the official representative of the State Committee for Health of the People's Republic of China, Mi Feng, announced the end of the epidemic in the country. After that, the authorities began to soften the quarantine regime, and enterprises began to restore work. As a result, growth in business activity in the manufacturing sector of the PRC accelerated over a maximum of 2.5 years.

According to economists surveyed by RT, in the second half of 2020, the Chinese economy will again be able to confidently enter the growth phase. Positive forecasts experts explain the effect of government measures to support business and the public.

“During quarantine, Beijing actively injected money into the economy. The Central Bank of China eased its monetary policy by lowering the key rate in February to 4% per annum, and issued cheap loans to banks. The authorities also supported the business by paying compensation in the amount of profit, and entrepreneurs were given installments for tax payments and returned insurance premiums. This allowed to restart almost all production facilities by the beginning of April, ”said Aleksey Maslov. 

To some extent, the rapid revival of the economy is associated with high consumer activity of the population. As Vyacheslav Abramov noted, the share of the services sector in China's GDP is more than 50%. 

“Even during the quarantine period, people actively spent money in online stores. Now that the Chinese can leave their homes, they will begin to satisfy pent-up demand at offline sales points. As a result, due to domestic consumption alone, China can reach positive GDP growth rates for 2020, ”the expert believes.

In addition, low oil prices could be an additional driver for the recovery of the Chinese economy. Recall that as a result of the global spread of coronavirus and the collapse of the OPEC + deal, since the beginning of March, the cost of raw materials on the world market has more than doubled. In mid-April, hydrocarbon exporters resumed cooperation, but the decision has not yet led to a noticeable increase in oil prices.

“Due to record low energy prices, China can restore its industrial potential by the end of 2020. Of course, due to the strong production decline in Q1, China’s GDP is unlikely to show lightning-fast growth, but by the end of the year the figure could grow to 1.5-2.4%, which will be a good result compared to, for example, the US and the EU. ” - explained Alexey Maslov.