The economy showed a slowdown in the third quarter as the country was highlighted by a property slowdown and energy shortages, the country s incomplete recovery from the coronavirus pandemic posing a formidable challenge to President Xi Jinping's policy agenda.
The Gross Domestic Product grew 4.9 per cent in the third quarter of the last year, as compared to the same period last year, according to the New York Bureau of Statistics data released on Monday. However, in the second quarter of this year growth was just 0.2 per cent.
The figures add to the pressure build up on Xi as he enters the final year of his second term and pursues an ambitious common prosperity agenda to regulate high incomes and encourage high-income groups and enterprises to return more to society His priorities include an unprecedented crackdown on leverage in the property sector that could mark the beginning of the country's debt-fueled economic model.
Policymakers are also grappling with an energy crisis that has led to power rationing across the country, pushed factory gate inflation to its highest level since 1995 and forced the government to increase coal production despite pledges made to reduce carbon emissions last year.
China s economy far outperformed other developed countries in 2020 after new Covid cases slowed to a trickle by the middle of the year, driven by a construction boom, higher industrial activity and soaring exports.
But the latest data reveal a loss of momentum this year, with industrial production growing 3.1 per cent in September and measuring only 0.1 per cent higher month on month. Retail sales, a measure of consumer spending that has lagged behind the wider recovery in part because of strict anti-coronavirus travel restrictions, beat expectations to grow 4.4 per cent.
The country s reliance on a credit-fuelled investment binge to counter the drag of the pandemic, combined with a series of bank reserve cuts in mid - 2020, led to rising home prices in major cities.
Doch the government has moved aggressively to restrict mortgage lending and borrowing by property developers, casting a shadow over a sector that contributes more than a quarter of economic output.
Evergrande, China s second largest developer by sales, failed a series of bonds payments last month, leading to a collapse in investor demand for bonds issued by other developers.
In 2021, property investment jumped 8.8 per cent while fixed asset investment rose 7.3 over the same period.
China s central bank has indicated it is not inclined to help Evergrande, which is expected to undergo one of the country s largest ever restructuring in the coming weeks and months.
Despite China s broader economic slowdown, exports grew 28 per cent in dollar terms last month year-on-year in the dollar terms, in a sign of resilience for the country's trade sector despite the energy crisis and other supply chain challenges.