China economy under pressure

Special Desk

While the world thought otherwise, statistics say China’s GDP is growing at the slowest pace in a year.

Reason(s), massive energy crunch, shipping disruptions and a deepening property crisis in the world’s second largest economy.

Figures show, the economy expanded by just 4.9% in the third quarter, compared with the same period a year earlier. That’s much slower than the 7.9% increase China registered in the second quarter. It’s also the weakest rate of growth since last year’s July-to-September period, when GDP also grew 4.9%.

“The challenges of keeping the economy running smoothly have increased,” said Fu Linghui, spokesperson for China’s National Bureau of Statistics, to a press briefing in Beijing. He said the country’s recovery from the Covid-19 pandemic is still uneven.

China, as the world understands, was the only major economy to escape 2020 without falling into recession. But it has encountered a slew of challenges this year that are weighing heavily on growth.

The country is in the middle of an energy crunch that is denting factory output and leading to power cuts in some areas. That problem has been fueled by demand earlier this year for construction projects that need fossil fuel and are at odds with Beijing’s pursuit of ambitious targets to cut carbon emissions. The real estate sector is also suffering from a government drive to curb excessive borrowing.

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Industrial production ticked up a mere 3.1% last month from a year ago, the lowest rate since March 2020, when the pandemic was slamming China’s economy. The triple threat of simultaneous crises in energy, shipping and the property sector is impossible to ignore.

“We think the electricity shortages and production cuts will become less of a problem” later in the fourth quarter, said Louis Kuijs, head of Asia economics for Oxford Economics.