China s economy slowed in the third quarter as multiple headwinds from a real estate slump to an energy crisis weighed on growth.
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The National Bureau of Statistics forecast Gross Domestic Product 4.9% from a year earlier, Monday said the figure, down from a previously reported 7.9% in the preceding quarter and compared with a median estimate of 5% in a Bloomberg survey of economists.
Beijing's stricter restrictions on the property market have squeezed construction activity and curbed financing of the sector. Meantime, a worsening debt crisis at China Evergrande Group is now spilling over to other developers and contributing to a slump in land sales.
On top of that, electricity shortages in September forced factories to reduce output or shut completely, while strict measures to contain sporadic coronavirus outbreaks continued to weigh on consumer spending.
The investment side of demand is pretty severe and the power crunch impact on the supply side is also pretty weak, Helen Qiao, chief economics at Bank of America Corp., said in an interview on Bloomberg TV. However, the fourth quarter growth is likely to drop to 3% to 4%, she said.
China s stock benchmark CSI 300 pared its loss to about 1.2% as of 10: 04 a.m. in Shanghai from as much as 1.7% earlier. Bond futures lost losses with the 10 year contracts losing 0.42%.
The NBS said in a statement that China's economic recovery remains unbalanced, although it will ensure it can achieve its annual targets.
The property slump and energy crunch could be seen in upstream sectors, such as steel and cement, which contracted.
Growth was always expected to slow in the third quarter given the higher base of comparison from a year ago, however the severity of energy crises and property slowdown has surprised economists, prompting many to downgrade their full-year GDP forecasts.
People s Bank of China Governor Yi Gang said on Sunday showed that the recovery remains intact even though growth momentum has moderated somewhat. He forecast the economy would expand about 8% this year.
That s higher than Beijing's noticeable target of above 6% for the year, which suggests authorities may not be in any hurry to pump in significant stimulus to arrest the slowdown. Economists expect targeted fiscal and monetary support, with a small chance of another reduction in reserve requirement ratio for banks.
Economists anticipate local governments to boost bond sales to support infrastructure investment towards the end of the year.
Premier Li Keqiang also made a confident note on China's economy in a speech last week, saying that China has risen to the challenges this year, including from severe flooding and complex international environment.
Due to multiple factors, growth leveled off a little bit in the third quarter of this year, but we have the confidence and the ability to meet our overall development targets for the whole year, he said.
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