SHANGHAI — China’s gross domestic product shrank 6.8 percent from a year ago in the first quarter, official data showed on Friday, the first recorded quarterly decline in the nation’s history as the coronavirus shut borders, paralyzed global supply chains, and halted all but the most essential business activity.
It reversed a 6 percent expansion in the fourth quarter of last year, China’s National Bureau of Statistics said.
“The last time we saw such a big contraction was back in 1967 when China experienced growth of -5.8 percent during the Cultural Revolution,” said Iris Pang, Greater China economist at ING, describing it not as the hoped-for V-shaped recovery but a fat U-shaped one.
Industrial production shrank 8.4 percent year-over-year in the quarter but showed promising signs of resumption in March as the shrinkage narrowed to 1.1 percent during that month.
China’s urban jobless rate, which for years has usually hovered at around 5 percent, came in at 5.9 percent at the end of March, after a record 6.2 percent reading the month prior.
The contraction in retail sales in March was also slightly improved — off 15.8 percent, after falling 19 percent in January and February — but categories like clothing was still deeply hurting, down 34.8 percent year-over-year.
“As long as there are strict social distancing measures, the recovery of activity will be very slow, and this will be reflected in consumption,” added Pang.
The pandemic has infected more than 2 million globally and claimed more than 130,000 lives. China, where the virus first emerged, officially reported more than 3,000 deaths although new infections have slowed considerably.
Many brands have refocused their efforts to court the Chinese consumer where resumption of business and lives is furthest along.
Alibaba’s cross-border Tmall Global said Friday it was aiming to bring 1,000 new foreign brands onto its e-commerce platform in the coming 12 month, promising that new storefronts could open within 30 days of registration.
JD.com also shared that “luxury products have sold well on JD during the epidemic, despite not being considered daily necessities.” The platform attributed it to the halt of international travel, citing a 2019 Bain & Co. report which said 70 percent of luxury purchases from Chinese consumers.
“With the restrictions on travel to the pandemic, it is more difficult for Chinese consumers to shop for luxury products outside of China by traveling on their own or through shopping agents,” JD.com said.
Meanwhile Hermès is said to have brought in at least 19 million renminbi, or $2.7 million, in sales on the reopening day of its flagship store in Guangzhou’s Taikoo Hui last Saturday, according to multiple WWD sources.
Another leading e-commerce marketplace Pinduoduo observed more than 60 percent year-over-year growth on order numbers in the second half of March 2020. On average, PDD saw more than 50 million orders per day since mid-March.