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China Economic Quarterly Q1 2020

Due to the ongoing COVID-19 pandemic, GDP has contracted by 6.8% for the first time in history in four decades, while a gradual recovery is expected in the beginning of Q2. 

This issue provides an overview of the macroeconomic trends in Q1 2020, some policy updates and hot topic analysis.



Here are some macro-economic highlights:

  1. GDP growth contracted by 6.8% in Q1
  2. Total fixed asset investment declined by 16.1%
  3. Total real estate investment decreased by 7.7%
  4. PMI fluctuated significantly in Q1
  5. The growth of industrial added values dropped by 8.4%
  6. Total retail sales of consumer goods reduced by 19%
  7. Imports and exports fell by 6.4%
  8. PPI decreased by 0.6% and CPI increased by 4.9%


Policy updates & hot topic analysis

Total bank loans reached 7.44 trillion yuan, the highest quarterly level on record

According to data from the PBoC, in Q1, the total aggregate financing to the real economy (AFRE) reached 11.08 trillion yuan or 961 billion more than the same period last year. This is mainly because GDP declined by 6.8% in the first quarter. Total loans to the real economy increased by 1.19 trillion and reached 7.44 trillion yuan, the highest quarterly level on record.

Fiscal spending decreased by 5.7%, while fiscal revenue reduced by 14.3%

As a result of negative GDP growth, China’s general public budget revenue reduced by 14.3% in the first quarter year-on-year. The situation has worsened compared to 2019 when fiscal income growth hit a 30-year low with a growth rate of 3.8% reaching 19.04 trillion yuan. 

Hot topic analysis: Amidst COVID-19, what’s next for China’s private sector?

As a result of the coronavirus outbreak in many countries, China’s economic growth has been seriously hit, particularly after the countrywide lockdown that took place at the end of January and during February. The unprecedented damage caused by the pandemic has presented the global and Chinese economy with several challenges. So, how is China’s private sector weathering this storm, particularly since the majority of these companies are small and medium-sized enterprises? What challenges does the private sector face? Are there any opportunities in the post pandemic period? 

  • The private sector plays a critical role in China’s economy contributing to more than 60% of GDP
  • The private sector provides more than 80% of China’s urban jobs
  • The private sector, particularly MSMEs, are the most vulnerable group
  • Many small and medium private companies involved in international trade might struggle to survive during this period
  • Private companies in the hospitality sector (including hotels and catering services) have also been hurt badly
Implications and opportunities
  • China can speed up financial reform to improve financing for the private sector
  • Set up a ministerial-level organisation within the Chinese government to support and promote MSMEs
  • Unleashing private investment in sectors dominated or controlled by SOEs
  • Give priority to six areas of job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains in 2020

Contact us

Elton Yeung

Vice Chairman, PwC China

Tel: +[86] (10) 6533 8008

Thomas Leung

Managing Partner - Markets, PwC China

Tel: +[86] (10) 6533 2838 / +[852] 2289 8288

Elton Huang

China Tax Leader, Central China Markets Leader, Shanghai Office Lead Partner, PwC China

Tel: +[86] (21) 2323 3029

G. Bin Zhao

Senior Economist, PwC China

Tel: +[86] (21) 2323 3681

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