China’s GDP Drop



China Discloses Contraction in GDP

China, whose economy had been growing at the end of 2019, has officially reported a 6.8% contraction in its first quarter GDP this year. This figure marks the first decline in the world’s second-largest economy (after the US) since records began in 1992.

Data points released by the National Bureau of Statistics of China show a stark contrast to this time last year. Industrial production in the first quarter of 2020 dropped 8.4% from that in 2019. Fixed asset investments were 16.1% lower from January to March of 2020 than they were in that same 2019 window. Retail sales this year dropped by 19% in the first quarter, with a 15.8% decline in March alone. Unlike other sectors, online sales grew at a rate of 5.9% from 2019.

The Promise of Increased Transparency

Analysts frequently doubt figures released by the Chinese government. Its death toll from the novel coronavirus has been revised time and again to show higher numbers than were originally disclosed. On Friday alone, 1,290 deaths were added to the previously reported 2,579 in Wuhan, showing a 50% increase in the statistics. The Chinese National Health Commission has provided explanations for the revisions, and insist it’s committed to an “open and transparent disclosure of information and data accuracy.”

The numbers regarding the country’s economic situation seem surprisingly honest, though, suggesting that Beijing may be reevaluating how it approaches economic guidance. With China as an example, other countries hit hard by the pandemic can develop a sense of what to expect—at least in the next few months.

Chinese Example Foreboding for US

The Chinese numbers serve as indicators of what could be expected stateside. Even when major industries resume, economic behavior won’t go back to business as usual. Viral spread still means less demand for Chinese export plus concern about a second wave of infections means continued pressure and uncertainty. The country’s GDP could drop even more if there’s a secondary outbreak.

Chinese economist Bo Zhuang explains “Even after the lockdowns have been lifted, people are cautious to consume. Shopping malls are open but they are not consuming, and that is the key.” Only 25% of Chinese respondents to an online survey by Morgan Stanley indicate plans to leave their homes for non-essential spending. The American economy depends even more on consumer spending than China does, so these patterns provide a dismal picture of what could happen in the US economy in the coming months.


Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS42003


All your finances.
All in one app.

App Store rating

Download on the App Store Get it on Google Play

ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit SoFi.com. Want an easy and convenient way to manage your financial life? Get the SoFi app. For iOS and Android.


TLS 1.2 Encrypted
Equal Housing Lender