China’s economic recovery stalled in the third quarter of 2021 as the GDP grew by 4.9 per cent down from 7.9 per cent in the second quarter, the National Bureau of Statistics (NBS) announced on Monday.
China’s economy made an early recovery from the impact of the coronavirus but is now faced with turbulence including a property slump, energy crisis, weak consumer sentiment and soaring raw material costs. It is the weakest pace since China’s economy grew by 4.9 percent in the third quarter of 2020.
State media said, China’s economic slowdown in the third quarter not only came amid a lower base effect from last year when the coronavirus pandemic was largely controlled throughout the country but also amid a range of economic challenges that China is facing now, such as the power crunch and supply chain issues. Already, several international financial institutions lowered China’s third-quarter GDP growth. The Standard Chartered bank lowered its prediction for China’s third-quarter GDP from six per cent to five per cent based on factors including flooding and the lingering effect of regulatory tightening.
State media quoted rating agency Moody as stating that China’s electricity cuts will add to the country’s economic stress and weigh on its GDP growth for 2022. It said that its risks to GDP forecasts could be larger due to disruptions to production and supply chains.
Experts also said that China’s GDP growth in the fourth quarter will face extra pressure, which may further drag down China’s GDP growth for the whole of 2021. According to experts, the biggest challenge now comes from the investment sector, as market expectations for the property market are trending down because of the banks’ tightening home loan requirements as well as the Evergrande debt crisis which has sparked off a major crisis in recent weeks as it began defaulting its payment of installments of its USD 309 billion debt.
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