The Chinese economy shrank 6.8% in the first three months of 2020 according to China’s National Bureau of Statistics, the first such contraction on record and a stark sign of the financial impact of the coronavirus pandemic. The economic contraction comes after months of paralysis as the country went into lockdown to contain the virus, which emerged in central Hubei province in December.
China’s first-quarter contraction follows declines in 2019, when the Chinese economy expanded at its slowest pace in almost 30 years – the result of slowing consumption, a pullback on debt-fuelled growth and a protracted trade war with the US.
Depressed demand from overseas is likely to hit the Chinese economy further but, while much of the rest of the world grapples with the virus, China now appears to have overcome the worst of it. The situation is improving and China has provided some economic assistance in the form of reduced company social benefit contributions, delayed tax filings, lower VAT for small scale enterprises, and more.
For foreign-invested enterprises in China, empathy towards both staff and clients is critical. There are opportunities to be had, especially in terms of companies improving internal processes and the use of digital tools.
Sovereign may be able to help in regards to finance and tax-related matters. Please read our special report – “Your China Business during the Global Covid-19 Outbreak” – and contact us here for further information.
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