China’s Economy

China’s Third-Quarter Economic Growth Slows Sharply to 4.9%

Power shortages and supply-chain problems added to the impact from Beijing’s efforts to rein in the real estate and technology sectors.

By guest author Jonathan Cheng from the Wall Street Journal.

Caption courtesy by the Wall Street Journal

China’s economic growth slowed sharply in the third quarter. Gross domestic product grew 4.9 % from a year earlier, compared with a 7.9 % gain in the second quarter. The weaker-than-expected GDP growth reflects a range of factors, including policy makers’ decision to pare back stimulus enacted in the immediate aftermath of the pandemic; a crackdown on the technology, private education and real-estate sectors; power shortages caused in part by soaring coal prices and more aggressive energy targets; and disruptions to the supply chain caused by Covid-19 outbreaks, semiconductor shortages and port shutdowns, Jonathan Cheng from the Wall Street Journal reports:

China’s economy grew 4.9 % in the third quarter from a year earlier, slowing sharply from the previous quarter’s 7.9 % growth rate, as power shortages and supply-chain problems added to the impact from Beijing’s efforts to rein in the real estate and technology sectors.

While many economists expected China’s year-over-year growth to trend lower in the second half of 2021, based in part on statistical comparisons to last year, the scale of the third-quarter slowdown was sharper than expected, falling short of the 5.1 % growth forecast by economists polled last week by The Wall Street Journal.

The slower-than-expected gross domestic product growth reflects a range of factors, including policy makers’ decision to pare back stimulus enacted in the immediate aftermath of the pandemic last year; a crackdown on the technology, private education and real-estate sectors; energy snafus caused in part by soaring coal prices and more aggressive energy targets; and disruptions to the supply chain caused by Covid-19 outbreaks, semiconductor shortages and port shutdowns.

When compared with the second quarter, China’s GDP inched up just 0.2 % in the three months ended Sept. 30, according to data released Monday by the National Bureau of Statistics. In the second quarter, China’s GDP rose 1.3 % from the prior quarter.

Despite the third-quarter slowdown, economists are generally confident that the Chinese economy will be able to make senior leaders’ annual GDP growth target of 6% or more, which was set in March.

For the first nine months of the year, China’s GDP expanded 9.8% compared with a year earlier, the statistics bureau said.

Fu Linghui, a spokesman for the statistics bureau, highlighted the economy’s ability to maintain its post-pandemic rebound in the first nine months of the year, even in the face of what he described as the country “carrying forward its structural adjustments,” a reference to the government’s campaigns to deal with debt and inequality.

In an acknowledgment of the mounting risks to the economy, Mr. Fu said that “there are increasing uncertainties in the external environment, while the domestic economic recovery is unstable and unbalanced.”