The outlook is gloomy: China’s growth is losing momentum again

Prospects are clouding over
China’s growth is losing momentum again

Rising raw material prices, supply bottlenecks and power outages are holding back China’s economy in the third quarter. After initially recovering strongly, the gross domestic product rose from July to September by only 4.9 percent, the slowest increase in a year.

The upswing in the Chinese economy clearly lost momentum in the third quarter. As the Beijing statistics office announced, the second largest economy grew by 4.9 percent in the third quarter compared to the previous year. After a record increase of 18.3 percent in the first and 7.9 percent in the second quarter, it is the weakest value so far this year. In the period from January to September, the total growth was 9.8 percent.

After having overcome the corona pandemic, China’s economy initially recovered strongly. Most recently, however, economists warned of a whole range of negative factors that could have a negative impact on the Chinese economy and thus also on the business of German companies on site.

The energy shortage in the country, which has already forced industrial companies to cut back on their production in the past few weeks, was named as a risk. European companies operating in China are also increasingly suffering from rationing and the consequent shutdowns of businesses.

The problems are likely to worsen with the upcoming winter heating season and will last “at least until March”, warned the chairman of the EU Chamber of Commerce in China, Jörg Wuttke. “We’re in a marathon, not a sprint.” EU companies complained about “chaos”. Often they are only informed at short notice, such as the evening before, or sometimes an hour before the start of the shift, that the electricity will be switched off.

Analysts were also concerned about the crisis surrounding the highly indebted Chinese real estate company Evergrande, which is weighing on the Chinese financial and real estate market. In addition, this year the government enforced stricter rules and bans on Internet companies and in numerous other industries, which also led to a poorer mood in the economy.

Other economic data presented were mixed. Industrial production, a measure of activity in the manufacturing sector, increased by 3.1 percent in September year-on-year. In August, growth was still 5.3 percent. Retail sales rose 4.4 percent after increasing 2.5 percent year over year in August.

source site