China’s gross domestic product grew less than expected in the third quarter of the year, as government measures to reduce debt in the real estate sector and power cuts ordered by authorities to deal with the energy crisis has wreaked havoc on the economy.
GDP grew 4.9% in the three months ended September compared to the same period of 2020, China’s National Bureau of Statistics said on Monday. Analysts polled by Reuters had forecast an expansion of 5.2%.
The economy was faced with a “complicated and severe environment both at home and abroad,” acknowledged the SNB. As a result, “the national economic recovery is still unstable and uneven,” spokesman Fu Linghui said at a briefing in Beijing.
Steps taken over the past year to curb high debt levels in the real estate sector and limit mortgage lending have notably reduced new building construction, which fell for the sixth consecutive month in September. And the misfortunes of the real estate developer
(3333.HK), which has missed three bond payments in recent weeks as it grapples with its $ 305 billion in debt, is weighing on the market.
Government-ordered power cuts across the country to deal with energy shortages have also hit businesses. Industrial production rose 3.1% year-on-year in September, but barely increased from its August level.
Meanwhile, sporadic Covid-19 explosions have hit activity in a country striving for zero tolerance for the disease-causing coronavirus, with strict local restrictions hampering activity.
Looking ahead, “the slow growth of the Chinese economy will continue,” ING analysts noted, as “the political challenges and high base effects of last year” that affected the economy in the third quarter will continue into the final months of the year.
UBS Chief Economist Paul Donovan also warned that “there were a lot of local factors” in the performance of China’s economy in the third quarter, such as “weather effects, zero tolerance policy towards Covid-19 and the impact of rising energy prices on an economy that is an inefficient energy consumer. For these reasons, he added, “there is no global automatic reading” of Friday’s figures for the global economy.
Companies exporting to China might feel reassured that the Chinese consumer appears to be showing resilience. Retail sales rose 4.4%, beating expectations. But the crucial question is how the government and the central bank will react to a slowdown that they have largely designed and predicted, and whether fiscal and monetary policies will attempt to ease the pain in the short term.
Write to Pierre Briançon at [email protected]