Coronavirus: China’s economy suffers dramatic collapse in January, February in warning to rest of world

Combined data for January and February showed that industrial production, retail sales and asset investment all declined far more than analysts expected

Lockdowns to control the coronavirus proved to be a constraint to economic growth, but with China now in recovery, data suggests what rest of the world could expect

Reading Time:3 minutes

Amid a widespread shutdown of manufacturing operations, industrial production declined by 13.5 per cent over January and February, data showed. Photo: Xinhua

Published: 10:00am, 16 Mar 2020Updated: 4:49pm, 16 Mar 2020

The coronavirus’ impact on China’s economy was made plain in new numbers released on Monday, which showed a dramatic collapse across the board.

Amid a widespread shutdown of manufacturing operations, industrial production – a measure of manufacturing, mining and utilities activity – declined by 13.5 per cent over the first two months of the year, combined data for January and February showed.

This was the first decline on record, although ordinarily the data is released monthly. But the numbers were well below expectations of a 3.0 per cent decline.

Retail sales, a key metric of consumption in the world’s second largest economy, fell by 20.5 per cent, again the first decline on record. This was well below the median forecast of a group of analysts, conducted by Bloomberg, which predicted a 4.0 per cent contraction.

Fixed asset investment – a gauge of expenditure on items including infrastructure, property, machinery and equipment – collapsed by 24.5 per cent, much worse than analysts’ predictions of minus 2.0 per cent. This was the first shrinkage on record.

That China’s economy sank to all time lows in the first two months of the year is not a surprise, given that the period included the Lunar New Year holiday, plus a prolonged containment effort that left hundreds of millions of people unable to return to work and factories struggling to get back to capacity.