China’s economic growth slumps amid construction, power, property woes

China’s economic growth slumps amid construction, power, property woes

China’s economy reportedly witnessed a dip in the last quarter due to construction slowdown and power crunch. The nation’s economy increased by 4.9% in July-September as compared to a year earlier, however, is a steep decrease from the previous quarter’s 7.9%.

Retail sales, factory output, and investment in construction along with other assets have faltered severely. The construction industry which supports millions of jobs has faced a massive downturn as regulators have strengthened control over borrowing by developers.

Whereas, the manufacturing sector has been affected by frequent power cuts due to official curbs on energy use to meet the nation’s energy efficiency goals. The factory output rose barely by 0.05% in September, decreasing from 7.3% for the first nine months of the year.

Sources claim that it is quite difficult to provide a near-term outlook for China’s economy in Quarter four due to continuing power shortages and a slowdown in the property sector. 

The real estate sector has been surrounded by several uncertainties pertaining to debt issues and fears over virus transmission to property developers. In fact, major property developer Evergrande Group is facing a major debt crisis which in turn has raised concerns among other developers.

Reliable statistics show that the growth in retail expenditure has weakened to 4.4% in September, from 16.4% recorded in the first nine months of 2021.

Furthermore, investments in fixed assets like real estate, housing, factories grew by 0.17% in September, down from 7.3% registered in the first nine months.

According to the China Association of Automobile Manufacturers, auto sales in the country dropped by 16.5% in September as compared to the previous quarter. This was due to the disruption in production owing to processors chips shortage.

Further, imports, which is a major indicator of the nation’s domestic demand, rose by 17.6% in September but is a sharp decline from 33% growth in August.

Private sector investors expect the nation’s economy to grow by 8% this year, fulfilling the ruling Communist party’s target of over 6%.

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