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 per cent 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 per cent 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 per cent on the disappointing data.
Home sales slump 17%
China’s residential property slump dragged on last month as the debt crisis at China Evergrande Group spread to other developers, keeping buyers away. Home sales by value tumbled 16.9 per cent in September from a year earlier, following a 19.7 per cent drop in August, according to Bloomberg calculations based on National Bureau of Statistics’ data. Real estate investment slid for the first time since the onset of Covid shut swathes of the economy at the start of last year, down 3.5 per cent from a year earlier, calculations show.