The country’s gross domestic product (GDP) grew by just 4.9 per cent in the July-September period from the same quarter a year ago, losing the momentum of its post-pandemic recovery, showed data released by its National Bureau of Statistics (NBS) on Monday.
The country had registered a 7.9 per cent increase in the previous quarter.
While analysts did expect China’s third-quarter growth rate to slow down because of the raging energy crisis, it dropped by an even greater amount than was predicted.
An analysts’ poll by Reuters had estimated the Chinese GDP to grow 5.2 per cent, while Bloomberg’s survey of economists set a median forecast of 5 per cent.
The country’s industrial production, announced along with the GDP, also recorded a slower 3.1 per cent growth in September, below the 4.5 per cent mark predicted by Reuters.
The NBS acknowledged the economy faced additional problems in the third quarter and admitted the power shortage had a “certain impact” on production. However, the agency said these challenges were “controllable”.
“Since entering the third quarter, domestic and overseas risks and challenges have increased,” NBS spokesperson Fu Linghui said at a press conference in Mandarin, according to CNBC.
The slump is indicative of a host of challenges that China’s economy has faced this year. The energy crisis has led to more power cuts and limitations on electricity usage by factories, resulting in an adverse impact on output.
The property sector — which accounts for as much as 30 per cent of the country’s GDP — is still clouded by fears of a collapse of Evergrande, the country’s second-largest developer, as it continues to struggle to meet its payment obligations.
Many Covid outbreaks across the country have also weighed on consumer spending.
The world’s second-largest economy reported a better-than-expected economic recovery from the pandemic earlier, with an 18.3 per cent growth in the first quarter of 2021. The current slump, however, has triggered worries about whether these challenges are finally weighing the economy down.
Experts hope for more positive moves from Beijing to help its economy get back on track.
“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.