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Officials said that due to power outages, real estate issues and COVID-19 concerns, GDP growth in the third quarter was at the slowest level in a year.
In the three months ending in September, China’s economy grew at the slowest rate in a year. It was hit by power shortages, supply bottlenecks and sporadic outbreaks of COVID-19. With increasing concerns about the health of the real estate industry, policy makers The pressure is increasing.
Data released on Monday showed that gross domestic product (GDP) in the third quarter increased by 4.9% year-on-year, the lowest level since the third quarter of 2020. Growth is also lower than economists expected. A survey of analysts by Reuters predicts a GDP growth of 5.2%, and a poll by Agence France-Presse predicts a growth of 5%.
Fu Linghui, spokesperson for the National Bureau of Statistics, said on Monday: “We must see that the current international environment is increasing and the domestic economic recovery is still unstable and uneven.”
As the world’s second largest economy, China’s economy grew by 7.9% in the second quarter and 18.3% in the first quarter, thanks to the downturn caused by COVID-19 in early 2020.
At the same time, industrial production growth slowed further to 3.1% in September.
“Growth has been dragged down by the slowdown in real estate, which has recently been exacerbated by the spillover effects of Evergrande’s dilemma,” Louis Cuis, head of Asian economics at Oxford Economics, told AFP.
With industry giant Evergrande struggling with more than $300 billion in debt, people are increasingly concerned about the real estate industry [Thomas Peter/Reuters]The dilemma of the real estate giant Evergrande—with a total debt of more than $300 billion—has been suppressing the sentiment of potential buyers.
Kuijs pointed out that due to the strict implementation of climate and safety targets by local governments, power shortages and production cuts “caused an additional blow to September”.
He added that the damage is evident in the slowdown in industrial output.
Electricity rationing in recent weeks, coupled with soaring raw material costs and the government’s climate push, has led to a reduction in mining and manufacturing activities.
Policy sources and analysts said that Chinese leaders are worried that the continued real estate bubble may undermine the country’s long-term development. Even if the economy slows, it may maintain severe restrictions on the industry, but may relax some measures if necessary. .
“In response to the poor growth data we expect in the coming months, we believe that policymakers will take more measures to support growth, including speeding up infrastructure construction and relaxing certain aspects of overall credit and real estate policies,” Kuijs told Reuters .
Premier Li Keqiang said on Thursday that despite the slowdown in economic growth, China has sufficient tools to cope with economic challenges and the government is confident of achieving its full-year development goals.
Retail sales rose to 4.4% from 2.5% in August because China has fewer virus control measures and China has implemented a rapid local lockdown on a small number of coronavirus cases.
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