China’s economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages, supply chain bottlenecks and major wobbles in the property market and raising pressure on policymakers to do more to prop up the faltering recovery.
Data released on Monday showed gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest clip since the third quarter of 2020 and missing forecasts.
The world’s second-largest economy is facing several major challenges, including the China Evergrande Group debt crisis, ongoing supply chain delays and a critical electricity crunch, which sent factory output to its weakest since early 2020, when heavy COVID-19 curbs were in place.
“The domestic economic recovery is still unstable and uneven,” said National Bureau of Statistics (NBS) spokesperson Fu Linghui at a briefing in Beijing on Monday.
China’s economy had staged an impressive rebound from last year’s pandemic slump thanks to effective virus containment and hot overseas demand for the country’s manufactured goods. But the recovery has lost steam from the blistering 18.3% growth clocked in the first quarter of this year.
“In response to the ugly growth numbers we expect in coming months, we think policymakers will take more steps to shore up growth, including ensuring ample liquidity in the interbank market, accelerating infrastructure development and relaxing some aspects of overall credit and real estate policies,” said Louis Kuijs, head of Asia economics at Oxford Economics.
A Reuters poll of analysts had expected GDP to rise 5.2% in the third quarter.
The weak numbers sent the yuan and most Asian stock markets lower amid broader investor concerns about the world economic recovery.
Global worries about a possible spillover of credit risk from China’s property sector into the wider economy have also intensified as major developer China Evergrande Group (3333.HK) wrestles with more than $300 billion of debt.
Chinese leaders, fearful that a persistent property bubble could undermine the country’s long-term ascent, are likely to maintain tough curbs on the sector even as the economy slows, but could soften some tactics as needed, policy sources and analysts said.