China growth cools amid construction slowdown

News sources quoted from: Associated press (AP)


Media (AP) – China grew by a weaker-than-expected 4.9% over a year ago in the three months ending in September, down from the previous quarter’s 7.9%, government data showed Monday. (18 Oct 2021)

The world’s second-largest economy’s growth is sinking under pressure from a construction slowdown and power shortages, prompting warnings about a possible shock to its trading partners and global financial markets. Factory output, retail sales and investment in construction and other fixed assets all weakened.

Manufacturing was hampered by official curbs on energy use and shortages of processor chips and other components due to the coronavirus pandemic. Construction, an industry that supports millions of jobs, slowed as regulators forced developers to cut reliance on debt that Chinese leaders worry is dangerously high. A spokesperson of the National Bureau of Statistics said at a press conference that the impact of power rationing would be “short-term and controllable”.

Compared with the previous quarter, the way other major economies are measured, output barely grew in the July-September period, expanding by just 0.2%. That was down from 1.2% in the April-June period and one of the past decade’s weakest quarters.

The slowdown adds to pressure on Beijing to prop up activity by easing borrowing controls and spending more on building public works. But forecasters said even if that happens, activity will weaken before policy changes take effect.

The spokesperson also said China is able to take effective measures in response to potential spillover due to policy change in other countries. The US Federal Reserve officials revealed last week that they could start reducing their monthly bond purchases as soon as next month.

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