China’s GDP falls 7% in first quarter, first decline in 28 years among coronaviruses


  • The Chinese economy shrank 6.8% in the first three months of 2020, signaling gloom for the country where the new coronavirus emerged before spreading worldwide.
  • The Chinese National Bureau of Statistics released economic data on Friday showing that the main economic indicators have declined in industrial production, retail sales, investment, imports and exports.
  • On news of the data, US economist Nouriel Roubini noted that the collapse in the first quarter was “staggering”, while one investor described the contraction as an “extraordinary shock”.
  • Visit the Business Insider home page for more stories.

China’s economy declined in the first quarter of 2020, its first contraction since 1992, as production and spending were frozen by the country’s coronavirus shutdown.

The National Bureau of Statistics announced on Friday that gross domestic product fell 6.8% during the period. That sets the pace for a full-year contraction, something that hasn’t happened since the 1970s, according to several media.

The sharp contraction reflects weak consumer spending and investor confidence as the coronavirus has flattened economies around the world. The city of Wuhan in central China, where the virus first appeared, revised its death toll from 2,579 to 3,869 on Friday, a jump of about 50%.

Economic data released on Friday showed that industrial production fell 1.1% year-on-year, retail sales of consumer goods fell 19%, capital investment fell 16.1% and imports and exports fell 6.4% – even worse than expected.

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China, however, wanted to present positive points, saying that overall national economic and social development in the first quarter was stable despite the outbreak of COVID-19.

“The result is modestly on the rosy side of what we think really happened in the first quarter,” said Miguel Chanco, senior economist for Asia at the Pantheon.

“But the official figures were very close to reality in the grand scheme of things, and this should be welcomed, despite the overwhelming picture they paint,” he said of the Chinese statistics.

Macroeconomics Pantheon graph showing the collapse of Chinese GDP in Q1 2020.

A Pantheon Macroeconomics chart showing the collapse of Chinese gross domestic product in the first quarter of 2020.

Macroeconomics of the Pantheon

Chanco also said Pantheon analysts expect a year-long contraction, although he noted that “the official titles probably won’t show it.”

American economist Nouriel Roubini pointed out Friday that the decline in Chinese GDP is a “rate of economic depression”. Roubini noted that in early April had shown positive economic growth for the country, but the collapse in the first quarter was “staggering.”

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“A 6.8% drop in GDP is an extraordinary shock to the Chinese economy, and by implication to the rest of the world,” said Richard Pearson, director of the EQi investment platform.

Pearson suggested that China’s data is an important indicator for considering the potential impact for the West while it is still plagued by the pandemic. He said he believed the impact would be more severe in the West due to the difference in the nature of the government’s responses, which appeared to have resulted in fewer deaths recorded in China.

Connor Campbell, financial analyst at SpreadEx, had a different opinion. He said that “given that some analysts were expecting a first quarter [China] a contraction of almost 11%, there may be a slim reason for having a perverse view of the data. “


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