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China fails to ease global ‘depression’ fears

In a world suffering from anemia, China might need another fiscal blood transfusion to inject new life into its economy.

Data released by the National Bureau of Statistics has revealed that GDP growth in the first quarter dropped dramatically. Of course, that was expected.

But a fall of nearly 7% illustrated the task of getting the country back on track after it was ravaged by the Covid-19 pandemic earlier this year.

Again, the United States and most of the leading nations in Europe are witnessing a meltdown in business activity. Populations are in lockdown, while economies have been brought to a standstill in the fight against a silent but deadly enemy.

The long road to recovery will be arduous.

“Public records suggest that at least half a million firms [in China] were dissolved in the first quarter and more are likely to close shop,” Mark Williams, the chief Asia economist at Capital Economics, said in a report this week.

As for the numbers, take a depth breath. In the first quarter, GDP contracted by 6.8% compared to the opening three months in 2019. It was the first reported period of negative growth since data was first released in the 1990s.

Historians have gone even further back, claiming that the economy last contracted at such a rate during “the Cultural Revolution.”

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