According to the latest news, the GDP of the world’s second-largest economy is increasing at the slowest pace in a year. China was suffering a massive energy crunch, shipping disruptions, and a deepening property crisis, which weakened the growth.
China’s economy increased by 4.9% in the third quarter of the year, compared with the same period a year earlier. That’s much slower than the 7.9% rise the country recorded in the second quarter. It’s also the weakest rate of growth since 2020’s July-to-September period when GDP also expanded by 4.9%.
A spokesperson for China’s National Bureau of Statistics, Fu Linghui, announced at a press conference in Beijing that the challenges of keeping the economy running smoothly have risen. He stated that China’s recovery from the coronavirus pandemic is still unstable and uneven.
Remarkably, China was the only leading economy to cope with 2020 without falling into recession. However, it has faced a slew of challenges this year that are hitting heavily on growth.
shipping delays along with mounting inventories have hit smaller manufacturers in China
The world’s second-biggest economy is in the middle of an energy crunch that is denting factory output. Moreover, it is also leading to power cuts in some areas. This has been fed by demand earlier this year for construction projects that need fossil fuel and are at odds with China’s targets to slash carbon emissions.
Additionally, shipping delays, as well as mounting inventories, have hit smaller manufacturers in China. As we know, they are now hurting for cash, resulting in lost orders and production cuts.
The real estate sector is also suffering from a government initiative to curb excessive borrowing. Furthermore, property investment is now dropping. Analysts say that that is placing pressure on developers, including Evergrande. As we know, Evergrande’s debt crisis has triggered concerns about the risk of contagion for the sector and the broader economy. Additionally, some other property companies have already revealed that they are struggling to pay their debts.
The latest data revealed that industrial production gained a mere 3.1% last month from a year ago. That is the lowest rate since March 2020, when the COVID-19 pandemic was slamming China’s economy. Meanwhile, real estate-related activities recorded steep reductions. According to estimates from Goldman Sachs, the fixed-asset investment seems to have declined in September, reversing a slight rise in August.
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