Much depends now on whether consumers regain a willingness to spend amid nervousness that the virus can stage a comeback as controls are relaxed. Evidence from the epicenter of the virus, Wuhan, suggests progress will be slow.

While factories around Wuhan are working around the clock to get back up to speed, the recovery of consumer-focused businesses won’t be straightforward. People are cautiously taking to the streets again, but they remain subject to curbs on their movements aimed at keeping the virus at bay.

The nation’s per capita disposable income declined by 3.9% in real terms in the first quarter from a year ago, the first contraction since the data was available in 2014.

Consumer caution “continues to restrain demand, and thus activity more broadly,” said Frederic Neumann, co-head of Asia economic research at HSBC Holdings Plc in Hong Kong. “This is reminder also for other economies of the arduous path to full recovery even after full lockdowns are removed. All this points to the need for a more determined policy push on both the monetary and fiscal fronts to ‘shock the system’ and get activity back up to its earlier vitality.”

Eoin Treacy's view

Personal consumption is going to take a hit because if Chinese consumers have learned anything from the six-week lockdown it is they are on their own when to comes to survival. Western countries are boosting the provision of cash to citizens to help them make it through the loss of income phase. Those kinds of support do not exist in China and therefore the key lesson is to boost savings.

The economic contraction of 6% is eerily similar to previous 6% annual growth targets and is a further example of how China’s statistics are a potluck dish when it comes to accuracy. The fiction of coronavirus infections and deaths may finally be waking the world up to the fact China lies…about everything. European governments finally reassessing giving China unfettered access to 5G networks is a welcome development.

A big bet was taken in 2000 to allow them into the World Trade Organisation. It was hoped that by helping to raise living standards, the administration would be civilised and become a willing global partner in delivering on liberal ideals of rule of law. That was considered an acceptable risk because of the boost to corporate profits achieved by opening up China’s manufacturing potential.

Lower priced consumer products and wider corporate margins were delivered, but the bet on creating a partner has not paid off. The West now has an agile competitor rather than a willing partner.

The number one lesson China’s administration learned from taking lessons in Singapore is single party rule can be sustained with economic growth. They just ignored the good governance and rule of law mantra pioneered by Lee Kwan Yew, which the rest of world assumed was implied.

Chinese consumers are undoubtedly retrenching, property prices are extraordinarily high so the government is constrained by property bubble risk and the international community is finally alert to the threat represented by China. They will stimulate and that might sustain growth in the short term but China’s heyday as the factory of the world is well and truly over.

Meanwhile the country is preparing for war. Reports of nuclear tests this week, sinking of Vietnamese fishing boats in the same week they open borders, undiminished expansion of the navy and investment in next generation technology all point in the same direction. China is preparing for a bipolar world with the ambition of becoming the next global hegemon. The WTO deal was done in service to corporate profits. The demerger process could come at the expense of corporate profits, where there will be clear winners and losers as well as a justified rise in nationalism and higher inflation.