Chinese GDP growth slows as real estate and energy wreak havoc

BEIJING – Steel mills faced power cuts . Computer chip shortages have slowed automobile production. Real estate companies in difficulty...

BEIJING – Steel mills faced power cuts. Computer chip shortages have slowed automobile production. Real estate companies in difficulty bought less building materials. The floods disrupted business in north-central China.

All of this has wreaked havoc on the Chinese economy, a key engine of global growth.

The National Bureau of Statistics said on Monday that China’s economy grew 4.9 percent in the third quarter, compared to the same period last year; the period was significantly slower than the 7.9% increase recorded by the country in the previous quarter. Industrial production, the pillar of Chinese growth, fell sharply, especially in September, posting its worst performance since the early days of the pandemic.

Two bright spots kept the economy from stagnating. Exports remained strong. And families, especially the more prosperous, started spending money again on restaurant meals and other services in September, as China once again succeeded in quelling small outbreaks of the coronavirus. Retail sales increased 4.4% in September compared to a year ago.

Chinese officials are showing signs of concern, although they have so far refrained from triggering a major economic stimulus. Their own efforts, however, are part of the current economic challenges.

“Although the government’s economic policies in recent months have some social benefits, they have also reduced economic growth somewhat in recent times,” said George Yu, an economist at Beijing Renmin University.

In recent months, the government has launched a series of measures to tackle income inequality and tame businesses, in part with the aim of protecting the health of the economy. But those efforts, including penalizing tech companies and discouraging real estate speculation, have also weighed on growth in the current quarter.

The government had also imposed limits on energy use as part of a broader response to concerns about climate change. Now electricity shortages are hurting industry and the country is rushing to burn more coal.

“The economy is slowing down,” said Yang Qingjun, owner of a corner grocery store in an aging industrial shoe factory district in Dongguan, near Hong Kong. The power cuts have prompted neighboring factories to scale back operations and eliminate overtime. Local workers live more frugally.

“Money is hard to come by,” Mr. Yang said.

Li you contributed research.

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Newsrust - US Top News: Chinese GDP growth slows as real estate and energy wreak havoc
Chinese GDP growth slows as real estate and energy wreak havoc
Newsrust - US Top News
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