China’s GDP grew at the slowest pace in a year in the third quarter of 2021, dragged by power outages, supply chain disruptions, and a deepening property crisis. Data from the National Bureau of Statistics showed the world’s second-largest economy expanded just 4.9% in the third quarter, decelerating sharply from the 7.9% growth in the second quarter. It marks the slowest growth rate since the third quarter of 2020, when China’s economy also expanded by 4.9%.
NBS spokesperson Fu Linghui said China faced increased challenges to keep the economy running smoothly as the country’s recovery from the COVID-19 pandemic remained “unstable and uneven.” Exports and the service sector became the bright spots preventing the economy from stalling. Prosperous families continued spending money on restaurant meals and other services, prompting a 4.4% year-on-year increase in retail sales last month.
However, soaring energy costs and power outages forced factories to reduce or suspend operations, hurting China’s manufacturing sector. Small manufacturers were grappling with soaring freight rates, shipping delays, and mounting inventories, resulting in lost orders and production curbs. China’s industrial production grew just 3.1% year-on-year in September, the weakest rate since March 2020, amid the height of the pandemic.
The property sector was also under the government’s crackdown on excessive borrowing. As a result, developers were under strain. Evergrande, one of China’s property giants, is in a massive debt crisis which has stoked concerns about its impact on the broader economy. Goldman Sachs estimated China’s cement and steel production to have contracted sharply in September, with fixed-asset investment reversing the gain in August.
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Published on October 19, 2021 9:43 AM (GMT+8)Last Updated on October 19, 2021 9:43 AM (GMT+8)
