China’s economic growth slows down as the Q3 GDP growth rate stands at 4.9%

During a press conference, NBS spokesperson Fu Linghui cited domestic and overseas challenges as the reasons for the slowing down of China’s economy in the last quarter. 

China’s GDP rate in the third quarter fell short of the forecast as industrial activity recorded weaker growth than expected in September. According to China’s National Bureau of Statistics (NBS), the country’s growth rate for the third quarter was 4.9 per cent, lower than the median forecast of 5 per cent and 4 per cent down from the corresponding quarter last year. 

Industrial production amassed a growth of 3.1 per cent in September, lower than the 4.5 per cent projected by Reuters. During a press conference, NBS spokesperson Fu Linghui cited domestic and overseas challenges as the reasons for the slowing down of China’s economy in the last quarter.

The domino effect of the Evergrande Group debt crisis, which heavily impacted the realty sector by restricting construction activity, land and property sales and sector financing, can also be accounted for the slow GDP growth. 

“Investment activities have been subdued as a result of the tight credit conditions,” Chaoping Zhu, global market strategist at J.P. Morgan Asset Management stated. 

Fu Linghui, spokesperson for the NBS also included the surge in coal prices resulting in the shortage of electricity in September as a reason for sluggish GDP growth. The shortage prompted local administration to abruptly cut off the power, which led to many factories reducing output or completely shutting down during the month. 

The power shortage had a “certain impact” on normal production, Fu Linghui stated during the press conference but he affirmed that the economic impact is under control. Both the crises have been estimated to have severely impacted the steel and cement sector, along with the reduced consumer spending as a result of COVID-19 related restrictions, which affected the growth rate even further.

Mounting inventories and shipping delays have also impacted smaller manufacturers in China, forcing them to either cut production or lose orders due to prolonged losses. 

Despite the setbacks, China is still on course to meet an annual growth target set by Beijing of more than 6%. For the first three quarters of 2021, GDP grew 9.8% from a year ago, when the Covid-19 pandemic was at its peak in the country. But the authorities are still wary of the setbacks that lie ahead. 

Fu noted in the press conference that the economic recovery is “still unstable and uneven.” “The challenges of keeping the economy running smoothly have increased,” he commented.

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