Hubei's First-Quarter GDP Fell Almost 40%
Zhou Fang
DATE:  Apr 22 2020
/ SOURCE:  Yicai
Hubei's First-Quarter GDP Fell Almost 40% Hubei's First-Quarter GDP Fell Almost 40%

(Yicai Global) April 22 -- Hubei, the province in central China hardest hit by the Covid-19 epidemic, logged an over 39.2 percent annual drop in its first-quarter gross domestic product. The environment for economic recovery still needs improvement with slump in both investments and consumption though positive signs have emerged in economic data last month, academicians said.

The GDP growth Hubei Provincial Bureau of Statistics published last night still arouse concern though the decrease has been priced in. Local governments need not to value GDP growth too much and should mostly aims for stabilizing employment and ensuring the people's well-being, Luo Zhi, director of Wuhan University's New Private Economy Research Center, said in his interview with Yicai Global.

Added value among Hubei’s industrial enterprises above designated size was down 45.8 percent in first quarter from a year earlier, data the bureau published yesterday showed. Except tobacco products, other mining and oil and natural gas extraction, thirty-eight of the province's 41 industry categories logged annual decrease in added value over the first three months.

Quarantine policy Hubei started to adopt since January resulted in significant slowdown in investment and consumption, with 82.8 percent fall in its first-quarter fixed-asset investment and a 44.9 percent annual decline in total retail sales of consumer goods. By sectors, catering services was affected most, with an annual 57.6 percent fall in turnover.

Decline of various economic indicators has narrowed last month, Huazhong University of Science and Technology's Prof. Chen Bo said in interview with Yicai Global. For example, the decline of added value among local industrial enterprises above designated size in March was down 32.9 percent percentage points from previous month, a clear sign of recovery.

"Primary and secondary industry will pioneer the return to positive growth, while the recovery of tertiary industry will take time." Chen expected. There are two negative factors. First, epidemic-caused decline in per capita disposable income is bound to curb consumption. Second, people still need to keep a distance from each other as the epidemic has not ended completely, reducing opportunities for consumption. "Some cities in Hubei recently introduced measures to stimulate consumption." Chen continued. "Local governments can step up the efforts in a more straightforward method."

The epidemic may bring more far-reaching impacts to Hubei's investment environment. Some of the scheduled financing plans have been delayed and normal cooperation between upstream and downstream firms was blocked, Yicai Global learned in visits to various local firms. Difficulty in returning to work place, tight budget, jump in logistics costs and relatively slow implementation of various preferential policies and other problems also harm the post-epidemic recovery.

Hubei's economy is in gradual recovery as the comprehensive advance of resuming work and production, and no change has occurred to the fundamental of a long-term upward economy, Chen added.

Local government is actively promoting business investment. Various firms including Tencent Holdings and JD.Com announced earlier this month that they will increase investments in Wuhan, the provincial capital of Hubei. Honeywell International, a Fortune 500 company, yesterday announced it will locate its head office of emerging market China in Wuhan, becoming the first Fortune 500 company that sets up a unit in the city this year.

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Keywords:   Hubei,GDP,Covid-19