December 9, 2021

China’s economy stumbles on electricity and property

  • China Q3 GDP grows by 4.9% y / y vs 5.2% forecast
  • Industrial production growth from September 2020 to September is weak
  • Property construction extends the decline

BEIJING, Oct. 18 (Reuters) – The Chinese economy reached its slowest growth in a year in the third quarter, hit by power shortages, supply chain restrictions and a massive fluctuation in the property market, and put pressure on policymakers. Stumbling recovery.

Data released on Monday showed gross domestic product (GDP) growth of 4.9% in July-September, with no weaker clips and forecasts from the third quarter of 2020 than a year earlier.

The world’s second-largest economy faces a number of major challenges, including the debt crisis of the China Evergrande Group, continuous supply chain delays and a major power crisis, which, since the beginning of 2020, has sent factory output to its weakness when there were heavy Govt-19 restrictions. .

“The domestic economic recovery is still volatile and volatile,” Fu Linghui, a spokesman for the National Statistics Office (NBS), told a conference in Beijing on Monday.

China’s economy has made a surprising recovery from last year’s epidemic, which has led to virus control and warmer foreign demand for the country’s manufactured goods. But recovery steam lost 18.3% growth in the first quarter of this year.

In response to the ugly growth numbers we expect in the coming months, we expect policymakers to take more steps to boost growth, including ensuring adequate liquidity in the interbank market, accelerating infrastructure growth and easing some aspects of the overall credit and real estate policies of Oxford Economist. Quiz said.

Analysts’ Reuters poll expects GDP to rise 5.2% in the third quarter.

Weak numbers sent the yuan and most Asian stock markets amid widespread investor concerns about a global economic recovery. read more

Global concerns about the spread of credit risk from China’s property sector to the wider economy have intensified as the lead developer China Evergrande Group. (3333.HK) Wrestling with more than $ 300 billion in debt. read more

Chinese leaders, who fear that the continued asset bubble will undermine the country’s long-term rise, are likely to maintain tight controls in the sector despite the economic slowdown, but policy sources and analysts said some tricks could be softened as needed.

New risks

New construction fell for the sixth month in a row in September, NBS data showed, the longest period of monthly declines since 2015, when developers with no money invested and suspended projects. read more

Meanwhile, the industry has been hit by power shortages triggered by coal shortages and environmental restrictions on steel plants and severe pollutants such as floods in the summer. read more

During the first wave of the epidemic, overall industrial output rose just 3.1% in September from a year earlier, marking the slowest growth since March 2020.

Aluminum output fell for the fifth month in a row and daily crude steel production reached its lowest level since 2018.

Beyond the negative trend, retail sales grew faster than forecast by 4.4% and grew by 2.5% in August, and the estimated nationwide unemployment rate fell to 4.9% from 5.1%.

“Most (negative) factors are policy-based … the economy has a lot of pain points and these pain points are not going away quickly because the policies are here, so it will continue until 2022,” he said. Iris Pang is the Chief Economist of Greater China at ING.

On a quarterly basis, growth slowed to 0.2% in July-September from a downward revision of 1.2% in the second quarter.

Prime Minister Lee Hsien Loong said last week that China had enough tools to tackle economic challenges despite slowing growth and was confident of achieving full-year growth targets.

On Sunday, Chinese People’s Bank Chinese Governor Yi Kang said the economy is expected to grow 8% this year. read more

“Currently, China’s financial strength continues to grow, and there is a relatively large space for monetary policy,” Fu told NBS.

However, the central bank is expected to be cautious about monetary easing due to concerns about high credit and property risks.

Analysts at Reuters expect the People’s Bank of China to avoid attempts to stimulate the economy by reducing the amount of money banks have in reserves until the first quarter of 2022.

Report by Kevin Yaw and Gabriel Grossley; Editing by Sam Holmes

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