Data 3rd quarter 2021
The country’s economic output increased 4.9 percent on both an annual and two-year basis in the third quarter, according to data released by the National Bureau of Statistics (NBS) Monday morning.
In the first three quarters, China’s GDP grew by 9.8 percent to reach a total of 82.31 trillion yuan ($12.8 trillion).
For China’s economy, this is lower growth than expectations, which stood at 5.2 percent.
It is significantly lower, as a matter of course, than the boom in the first 6 months of 2021, which had recorded growth of 18.3 percent in Q1 and 7.9 percent in Q2 (+12.7 percent year-on-year overall).
Industrial production in September posted +3.1 percent against a forecast of +4.5 percent.
Causes: Energy and Real Estate
The causes of China’s lower GDP growth are mainly energy shortages and problems in the real estate sector.
The energy shortage has had some impact on production, and in fact the government is increasing efforts to increase energy supply (mainly by relying on coal).
Many factories had to stop production at the end of September when a surge in coal prices and an electricity shortage prompted local authorities to abruptly cut power.
The other sore point is the concerns related to the real estate bubble of which the Evergrande affair is the best known, but not the only one. We are talking about USD 300 billion worth of liabilities, if you are not familiar with the story you can learn more about it at this link.
The government has intervened by tightening credit to real estate activities, and this has led to a decline in the real estate sector. Investment in fixed assets for the first three quarters of the year was weaker then: according to data from the Office for National Statistics, the increase was 7.3 percent from a year ago, compared with the 7.9 percent expected.
Lastly, the control policies Beijing is implementing in the technology and media sectors have certainly not stimulated investment and helped growth.
China GDP: forecast 2021 and 2022
Major banks’ forecasts for 2021 China GDP growth are in the range of 7.7 percent (Nomura-Japan) to 8.8 percent (DBS-Singapore).
Goldman Sachs revised its estimates downward to 7.8 percent from the previous 8.2 percent.
For 2022, most people’s forecasts are between 5.2 percent and 5.8 percent.
A more reliable view of China 2022 GDP will have to wait until the clouds clear and more is understood about the extent of the real estate bubble and the steps the Chinese government will take, because all forecasts are heavily influenced by this factor.