China’s economy will grow 4.9% in the third quarter as post-pandemic momentum slows

China’s economic growth weakened in the third quarter as real estate slowdowns and energy shortages highlighted an incomplete recovery from the coronavirus pandemic and posed a formidable challenge to President Xi Jinping’s policy agenda.

Gross domestic product increased 4.9 percent in the third quarter compared to the same period last year, according to data released by the National Bureau of Statistics on Monday. However, compared to the second quarter of this year, the growth rate was only 0.2%.

As he enters the final year of his second semester and pursues ambitious things, the numbers increase the pressure on Xi. “Common prosperity” The agenda to regulate high incomes and “encourage high income groups and businesses to return to society more”.

His priorities include unprecedented Leverage crackdown in the real estate sector It could mark the beginning of the end of a national debt-fueled economic model.

Policy makers Energy crisis It led to national electricity distribution, push Factory gate inflation Reached the highest level since 1995, forcing the government to increase Coal production Despite last year’s promise to reduce carbon emissions.

China’s economy far outperformed other developed nations in 2020, with new Covid cases slightly declining by the middle of the year due to a construction boom, increased industrial activity and a surge in exports.

However, according to the latest data, the momentum has been lost this year, with industrial production up 3.1% in September, up only 0.1% month-on-month. Retail sales are an indicator of consumer spending lagging behind a wider recovery, in part due to strict anti-coronavirus travel restrictions, above expectations of 4.4% growth.

Reliance on credit-fueled investment binge to counter pandemic resistance, coupled with a series of bank reserve cuts in mid-2020, has led to higher house prices in major cities.

However, the government is actively working to limit mortgage lending and borrowing by real estate developers, casting a shadow over sectors that contribute to more than a quarter of economic production.

Last month, China’s second-largest developer, Evergrande, missed a series of bond payments. Collapse of investor demand for bonds Published by another developer.

Real estate investment increased 8.8% in 2021, while fixed asset investment increased 7.3 over the same period.

China’s central bank has shown that it is unlikely to support the evergrande group, which is widely expected to undergo one of the largest restructurings in the country in the coming weeks and months.

Despite China’s widespread economic slowdown, exports rose 28% year-on-year on a dollar basis last month, despite the energy crisis and other supply chain challenges. This shows the resilience of the country’s trade sector.

Additional report by Xinning Liu

China’s economy will grow 4.9% in the third quarter as post-pandemic momentum slows

Source link China’s economy will grow 4.9% in the third quarter as post-pandemic momentum slows

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