China's economic growth falls to 4.9% in third trimester, more than expected

Chinese economic growth fell more than expected in the third quarter, at times that the country suffers an energy crisis and the real estate sector faces more s

China's economic growth falls to 4.9% in third trimester, more than expected

Chinese economic growth fell more than expected in the third quarter, at times that the country suffers an energy crisis and the real estate sector faces more severe policies, official data revealed this Monday.

The recovery of the second largest world economy lost strength after its rapid after pandemic resurgence, with a year-on-year expansion of 4.9% of GDP in the third quarter, said the National Statistics Office (ONS).

The figure is lower than the forecasts of 5% analysts consulted by AFP, and represented a slowdown since the expansion of 7.9% in the period from April to June.

"We must note that the uncertainties of the current international environment are increasing and that internal economic recovery is still unstable and unequal," the spokesman for the ONS, Fu Linghui, in a statement.

"Growth was affected by a decline in the real estate sector, recently amplified by the problems of Evergrande," explained Louis Kuijs, Chief Asian Economy of Oxford Economics.

The difficulties of the Evergrande Real Estate Giant, which drags a debt of more than 300,000 million dollars, have affected the feeling of potential buyers in the sector.

However, the Chinese central bank assured the weekend that any Impact of Evergrande will be controllable, and the Governor of the Institution, Yi Gang, said on Sunday in a seminar that the authorities are attentive to problems with a possible lack of payment of some companies.

Yi indicated that Chinese GDP should grow around 8% this year.

But Kuijs stressed that there was an "additional blow in September" for blackouts and cuts in production due to the strict application of climatic and safety goals by local governments.

He added that the damage became visible in the decline of industrial production, which decelerated 3.1% in the year-on-year measurement to September.

"The weak GDP of the third quarter reflects a combination of negative factors," as interruptions in the supply chain, said Rajiv Biswas, Chief Economist for Asia-Pacific at IHS Markit.

Analysts of Fidelity International said that, although real estate fears are in the "epicenter of the shock", the economic ballast is exacerbated by the energy problem, the regional closures and the strategy of "zero covid", which hit the service sector .

"The only surprise in Chinese GDP figures is not lower," said Paras Anand, Fidelity Asia-Pacific Investment Chief Officer.

The energy rationing of recent weeks, together with the growing cost of raw materials and government climatic measures have caused a reduction in mining and manufacturing activity.

However, retail sales grew 4.4%, above 2.5% in August, upon rising some measures of health containment 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 guide it more to consumers and less towards investment and exports.

But the authorities must maintain a delicate balance between growth support and contain inflation, before the fastest increase in the factory prices of the last quarter of a century.

Although the demand continues strong, factors such as the extreme climate and the outbreaks of the coronavirus -además of the energy scarcity and the decline of the real estate market - have caused the Chinese economic slowdown, according to analysts.

Updated Date: 18 October 2021, 03:17

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