Updated on Monday, October 18, 2021 – 08:26
The world’s second largest economy suffers an energy crisis and the real estate sector faces tougher policies
Hangzhou Truck Engine Factory .
Chinese economic growth fell more than expected in the third quarter, as the country suffered a energy crisis and the real estate faces tougher policies, official data revealed on Monday.
The recovery of the second largest economy in the world It lost steam after its rapid post-pandemic resurgence, with a 4.9% year-on-year expansion of GDP in the third quarter, the Office of National Statistics (ONS) said.
The figure is less than 5% forecast of analysts consulted by ., and represented a slowdown from the expansion of 7.9% in the period from April to June.
“We should note that they are increasing uncertainties the current international environment and that the domestic economic recovery is still unstable and uneven, “ONS spokesman Fu Linghui said in a statement.
“Growth was affected by a decline in real estate, recently amplified by the problems at Evergrande,” said Louis Kuijs, head of Asian economics at Oxford Economics.
The difficulties of the real estate giant Evergrande, which has a debt of more than 300,000 million dollars, have affected the sentiment of potential buyers in the sector.
However, the Chinese central bank assured over the weekend that any impact from Evergrande would be controllable, and the governor of the institution, Yi Gang, assured Sunday in a seminar that the authorities are alert to problems with a possible non-payment of some companies.
Yi indicated that Chinese GDP should grow around 8% this year.
But Kuijs noted that there was an “additional hit in September” by the blackouts and cuts in production due to the strict enforcement of climate and safety goals by local governments.
He added that the damage became visible in the decline in industrial production, which slowed to 3.1% in the year-on-year measurement to September.
“The weak GDP in the third quarter reflects a combination of negative factors,” such as supply chain disruptions, said Rajiv Biswas, chief economist for Asia-Pacific at IHS Markit.
Energy and covid
Fidelity International analysts said that while property fears are at the “epicenter of the shock,” the economic drag is exacerbated by the energy problem, regional closures and the “zero covid” strategyWhat a blow to the service sector.
“The only surprise in the Chinese GDP figures is that they weren’t lower,” said Paras Anand, Fidelity’s Asia-Pacific chief investment officer.
The energy rationing in recent weeks, together with the rising cost of raw materials and the government’s climate measures have caused a reduction in mining and manufacturing activity.
Nevertheless, retail sales grew 4.4%, up from 2.5% in August, as some sanitary containment measures were lifted in the country, which imposed emergency closures in some areas affected by the virus.
The urban unemployment rate reached 4.9% in September.
The Chinese government has tried to recalibrate the economy to orient it more towards consumers and less towards investment and exports.
But the authorities must maintain a delicate balance between supporting growth and containing inflation, given the most rapid increase in factory prices in the last quarter of a century.
Although demand remains strong, factors such as extreme weather and coronavirus outbreaks – in addition to energy shortages and the decline in the housing market – have caused the Chinese economic slowdown, according to analysts.
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