BEIJING: China’s economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages and wobbles in the property sector, highlighting the challenge facing policymakers as they seek to prop up a faltering recovery while reining in the real estate sector.
Gross domestic product expanded 4.9% from a year ago, missing forecasts, as attempts by Beijing to curb lending to the property sector exacerbated the fallout from electricity shortages which sent factory output back to levels last seen in early 2020, when heavy COVID-19 curbs were in place.
The world’s second-largest economy had staged an impressive rebound from last year’s pandemic slump but the recovery has lost steam from the blistering 18.3% growth clocked in the first quarter.
Under President Xi Jinping, a drive to make structural changes that address long-term risks and distortions, which has involved crackdowns on the property sector and technology giants, as well as carbon emission cuts, has taken a toll.
Analysts at Barclays cut their fourth quarter forecast by 1.2 percentage points to 3.5% on the disappointing data. Analysts at ANZ cut their forecast for China’s 2021 GDP growth to 8.0% from 8.3%
Policymakers will now have to balance the impact of those structural changes with steps that will shield the economy and tame contagion risks from a debt crisis at major developer China Evergrande Group.
Head of Asia economics at Oxford, Louis Kuijs said , response to the ugly growth numbers we expect in coming months, we think policymakers will take more steps to shore up growth, including ensuring ample liquidity in the interbank market, accelerating infrastructure development and relaxing some aspects of overall credit and real estate policies,” .
China, still an avowedly socialist country, has pledged to reduce inequality after years of breakneck growth but may have to tread cautiously to avoid derailing a private sector that has been a vital engine of growth and jobs, analysts say.–reuters.