Monday 15th November 2021
Prospects still clouded
Chinese industry is growing faster
Economically, China is getting through the Corona crisis much better than many other countries. Despite bottlenecks, the Chinese economy can increase its industrial production and retail sales in October. Economists, however, expect growth to slow down soon.
Despite bottlenecks and the tough action by the authorities against corona outbreaks, the Chinese economy picked up a gear in October. This is indicated by the accelerated growth of industrial production and retail sales. The companies produced 3.5 percent more than a year earlier, as the statistics office in Beijing announced.
Economists polled by Reuters had only achieved an increase of 3.0 percent, after there had been an increase of only 3.1 percent in September. The retailers took 4.9 percent more than in October 2020. Here analysts had only expected a growth of 3.5 percent, after plus 4.4 percent in September.
However, the outlook remains bleak. “Growth is likely to slow for the remainder of this year,” said asset manager Pinpoint Asset Management’s chief economist Zhiwei Zhang. “Covid outbreaks have forced more cities to tighten their travel restrictions, which is likely to affect the service sector in November.
Then there are the problems in the real estate sector, where the industry giants China Evergrande and Kaisa are threatened with insolvency. The development here is the greatest risk for the economy, said Zhiwei. Experts therefore expect the government and the central bank to intervene to provide support. “We expect policymakers to take further easing measures to keep growth from falling too low,” said Oxford Economics economist Louis Kuijs.
Economically, China got through the Corona crisis much better than many other countries. Recently, however, the prospects didn’t look quite so rosy. 36 percent of German companies with foreign business stated in a DIHK survey that they expected a positive economic trend in China. In the spring, however, it was still 70 percent. In the third quarter, the Chinese economy only grew by 4.9 percent compared to the previous year. That was the lowest value since the third quarter of 2020.