BEIJING • China's economy suffered through an "eye-popping" first quarter as the coronavirus outbreak hammered business activity, with deterioration even as companies were supposed to be going back to work, a private survey showed yesterday.
Chinese companies had their worst quarter on record, with every individual sector reporting worse results in the first three months of this year, according to the China Beige Book, a quarterly survey of firms.
There was widespread decline in sales, especially in the retail sector, and a simultaneous collapse in revenue and profits, according to the report, which is published by CBB International.
Economic activity collapsed in China last month as the government shut down the nation to try to stop the spread of Covid-19.
The outbreak is now sweeping the world, with others following in China's footsteps in restricting movement and work in an attempt to slow the spread of death and illness.
"A 10 per cent to 11 per cent (gross domestic product) contraction is not unreasonable" this quarter, with any recovery dependent not just on domestic resilience, but also factors beyond the government's control as China's partners shut down, according to the report.
"China may also have to admit to poor (second-quarter) numbers on global weakness. Investors may therefore be severely overestimating the extent of China's recovery and hence the extent to which China can cushion a global downturn."
There is no reason to think the household is any better off, the report said, with a contraction in employment across every sector.
The report is based on data and interviews with over 3,300 firms between Feb 13 and March 12.
Economists have repeatedly cut their forecasts for China's growth, and now see a deep contraction this quarter and the slowest expansion this year since 1976.
Even so, policymakers have expressed confidence that things in China are getting back on track and will improve in the April-June period. China is due to release first-quarter gross domestic product in the middle of next month.
The report showed the index for the workforce started contracting in the first quarter for the first time since early 2016. If that continues, it will place additional pressure on the government to act to stimulate the economy, with the official unemployment rate already at a record-high 6.2 per cent last month.