China's economy shrinks, suffers huge drop in face of coronavirus battle

China's economy shrank 6.8 per cent in January-March from a year ago, the first such decline since at least 1992.

The historic slump in the world's second-largest economy comes in the face of coronavirus-enforced lockdown. The deadly virus emerged in China late last year, and developed into a pandemic by March, 2020.

China declared victory over the virus in early March and started reopening factories and offices even as the United States and Europe tightened controls. But cinemas, hair salons and other businesses that are deemed non-essential but employ millions of people are still closed. Tourism is struggling to recover.

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Some forecasters had earlier said China, which led the way into a global shutdown to fight the virus, might rebound as early as this month.

Retail spending, which supplied 80 per cent of China's economic growth last year, plunged 19 per cent in the first quarter from a year ago, below most forecasts. Investment in factories and other fixed assets, the other major growth driver, sank 16.1 per cent.

Beijing is trying to prop up activity by spending more on building next-generation telecoms networks and other projects. But the ruling party doesn't want to pump too much money into the economy for fear adding to debt or pushing up inflation that is near a seven-year high.

Similar shutdowns now in effect in major economies elsewhere have devastated global trade.

(with inputs from agencies)