The COVID-19 economic and social crisis is moving on from the world’s second-largest economy to the largest.
Coronavirus infections and deaths outside of China now outnumber those in China, according to official data, the Guardian reports. In the U.S., President Trump has finally “snapped out of coronavirus delusion mode,” according to Axios, and declared a national emergency on March 13. States and cities across the U.S. began to shut down restaurants and bars, at the same time that similar measures became common across Europe.
If the economic effects on the U.S. and European countries end up being anything like the data from China indicates, 2020 is shaping up to be a year of global financial crisis.
“China’s much-anticipated joint January and February growth data, released Monday, confirmed what had long been apparent in alternative measures such as traffic congestion: The country more or less ground to a halt last month,” the Wall Street Journal reports (paywall). “Industrial growth fell 13.5% on the year — a more abrupt dip than during the financial crisis. Nearly every other indicator also took a record dive. Of 41 major industrial sectors, 39 contracted: oil and gas and tobacco were the only exceptions.”
Retail sales and fixed asset investment fell by 20.5% and 24.5%, respectively, far worse than analyst expectations, the SCMP notes. The official unemployment rate also rose to 6.2% in February, its highest on record, per CNBC. If the Chinese economy actually shrunk in the first quarter, it would be “the first contraction since 1976, when China was hit by the devastating Tangshan earthquake as well as the tumult from the death of Mao,” the New York Times adds.
Simon Rabinovitch, a correspondent for The Economist, commented:
China’s early response — marred by cover-ups, censorship and deceit — was disgraceful. But the message in this data is clear: in the past 2 months it has dramatically shifted its focus to containing the virus, at a huge cost to itself. That is a dangerous message to ignore.
Many economists are saying that the U.S. economy is about to follow China’s with a severe hit, and possibly a recession. Goldman Sachs has already predicted that Q2 will see a 5% contraction, per Bloomberg.
As the world suffers from COVID-19, a creepy schadenfreude in Chinese state media has begun to surface: “87,182 cases outside China! Overtaking!” reads an oddly celebratory title of a chart in the People’s Daily, as noted by Quartz reporter Jane Li.
Xi Jinping has sent condolences to South Korea, Iran, and Italy, per Bloomberg. It will be interesting to see what kinds of messages Xi sends about the outbreak in the United States in the coming weeks.