An employee measures a newly manufactured ball mill machine at a factory in Nantong, Jiangsu province, China June 28, 2019. Photograph:( Reuters )
Around the same time last year, China's growth rate was 6.4 percent
While the death toll is rising due to COVID-19, China’s economy is now feeling the effects.
It has contracted by 6.8 percent, for the first time in more than 40 years.
This drop came in the first three months of 2020. The last time something like this was seen was in the year 1976.
The Chinese economy survived the Tiananmen Square crackdown, the SARS epidemic, and the global financial crisis of 2008.
China doesn't see a real recovery until the end of this year. The huge decline wipes out a six percent expansion.
Around the same time last year, China's growth rate was 6.4 percent.
The SARS outbreak happened in 2003, it caused some fluctuation in China's economy.
More than a fluctuation
The COVID-19 virus is causing much more than a fluctuation.
Not just because of the slowdown in economic activity at home, but also because of the new challengers in the global market.
Japan is one of them.
Prime minister Shinzo Abe has announced plans to build an economy that is not dependent on China.
His economic relief package sends the same message.
Japan is ready to spend a little more than two billion dollars.
The fund will be given to Japanese businesses - who are ready to move back from China.
Another 215 million dollars will be made available to those - who want to move to other countries.
Such proposals are worrying China.
A report in the Nikkei Asian Review says that a "heated debate" is underway in China's political circles.
Leaders of the Communist Party in Beijing are concerned about companies withdrawing from china.
Soon after Japan announced its plans - the Chinese leadership went into the huddle. President Xi Jinping called a meeting.
He met with his fellow members of the Politburo Standing Committee - the highest decision making body of China.
It’s a group of seven men that control the destiny of China.
Reports say that Jinping instructed the group to assume the worst, and be prepared.
The politburo usually meets once a week. The agenda or the content of internal discussions - rarely comes out.
But this time around, a press release was issued.
The Chinese state media reported that the standing committee "analysed the COVID-19 situation and economic performance at home and abroad."
The coronavirus outbreak has reduced the world's appetite for Chinese goods.
For Beijing, the economic challenge is two fold.
First, bring the factories online. Resume normal business activity.
Two, keep the businessmen in China!
China has signalled that a significant economic stimulus is on its way.