Beijing has succeeded in getting large parts of the economy up and running from a standstill in February, but analysts say policymakers face an uphill battle to revive growth as the coronavirus pandemic ravages demand at home and abroad.
Analysts polled by Reuters expect gross domestic product (GDP) to have shrunk 6.5% in January-March from a year earlier. That would reverse a 6% expansion in the previous quarter and mark the first decline since at least 1992 when official quarterly gross domestic product (GDP) records started.
China releases first-quarter GDP data at 0200 GMT on Friday, along with March factory output, retail sales and fixed-asset investment.
Analysts at Nomura said they expected Beijing to deliver a stimulus package in the near-term, which could be financed by the central bank through various channels.
"However, unlike previous easing cycles, when most of the new credit went to finance spending on infrastructure, property and consumer durable goods, this time we expect most of the new credit to be used on financial relief to help enterprises, banks and households survive the COVID-19 crisis," they said in a note.
For 2020, analysts polled by Reuters expected China's economic growth to slow sharply to 2.5% from 6.1% in 2019, which would be the weakest clip since 1976, the final year of the decade-long Cultural Revolution that wrecked the economy.
The pandemic has infected more than 2 million globally and killed more than 130,000. China, where the virus first emerged, has reported more than 3,000 deaths although new infections have dropped significantly from their peak.
As China moves to ease travel restrictions and reopen factories, similar lockdowns now in effect in other major economies hit by the virus have significantly darkened the outlook for global demand.
The world economy is expected to shrink 3.0% during 2020 in what would mark the steepest downturn since the Great Depression of the 1930s, the International Monetary Fund said on Tuesday.
The IMF expects China's economy to grow just 1.2% in 2020, before rebounding by 9.2% in 2021.
Beijing is scrambling to fend off mass job losses that could threaten social stability, while also keeping growing debt and financial risks under control.
The global uncertainty has made it harder for Chinese leaders to set an economic growth target for 2020 given the initial goal of around 6% now looks well out of reach, policy insiders said.
Top policymakers are now likely to set a lower target lower than the initial one, ahead of the annual parliament meeting, they said.
The meeting was originally scheduled for March 5 but was postponed due to the outbreak. No new date has been announced though sources have previously said it could be late April or early May.
Sources have told Reuters that China is set to unleash trillions of yuan of fiscal stimulus to revive the economy, and the central bank will dole out more easing steps.
On Wednesday, the central bank cut the interest rate on its medium-term lending facility by 20 basis points, paving the way for a similar cut in the benchmark lending rate on April 20.