The Chinese economy is slowing down amid nationwide power cuts and a looming property crisis. “China’s housing slump and electricity shortages dragged down economic growth last quarter, with signs there will be more pain to come as the country heads into winter and property curbs remain,” Bloomberg reported on Monday.
China grew by 4.9 percent year on year between July and September, down from 7.9 percent in the previous three months.
News reports suggest that the world’s second-largest economy could contract even further as the year draws to a close. “A worse-than-expected third quarter economic performance for China has indicated there could be more pain ahead in the final three months of the year,” The Hong Kong-based South China Morning Post noted.
The London-based newspaper Financial Times reported China’s slowing growth:
China’s economic growth in the third quarter slumped to its slowest pace in a year, as a property slowdown and energy shortages highlighted rising pressure on policymakers.Gross domestic product grew 4.9 per cent year on year between July and September, according to data released by the National Bureau of Statistics on Monday, compared with 7.9 per cent in the three months ending in June.On a quarter-on-quarter basis, growth was just 0.2 per cent.The figures add to the pressure building on President Xi Jinping as he enters the final year of his second term and pursues an ambitious “common prosperity” strategy, an effort to tackle “excessively high incomes” and encourage wealth redistribution. (…)Policymakers are also grappling with an energy crisis that has led to power rationing across the country, pushed factory gate inflation to its highest level since 1995 and forced the government to increase coal production despite pledges last year to reduce carbon emissions.
China has been hit by a nationwide power crisis, forcing the factories to shut down and lower production. “In late September, as many as 20 provinces have reportedly been hit by the surge in the price of coal and a shortage of electricity, with factories temporarily shuttered or working on short hours,” the Singapore daily Straits Times reported.
Disruptions in coal supply and shortages in hydro-power generation have been blamed for the country’s worst power crunch in a decade. The crisis is expected to drive global fuel prices as Beijing had told the state-run energy companies to secure fuel in the global market “at all costs,” news reports confirm.
China’s real estate also faces an uncertain future as the country’s second-largest property developer, Evergrande Group, is reeling under over staggering $300 billion in debt.
The Communist regime is working behind the scenes to save the faltering property giant. “Beijing is prodding government-owned firms and state-backed property developers such as China Vanke Co Ltd to purchase some of embattled China Evergrande Group’s assets,” the Reuters reported late September.
But the financial troubles of China’s property giant are far from over, and the crisis could spill over to other real estate developers, news reports suggest. “The fallout in China’s property sector is showing no signs of abating, as more developers face the threat of default — even as uncertainty over the fate of heavily indebted Evergrande looms,” CNBC reported on Monday.
Much of China’s recent economic growth has come from the booming real estate sector. The housing activity accounts for nearly 30 percent of its GDP.
CLICK HERE FOR FULL VERSION OF THIS STORY