Real estate also is suffering from “fears of contagion to some other property developers.”
The near-term outlook “remains difficult," said Rajiv Biswas of IHS Market in a report.
The ruling Communist Party’s official target is “more than 6%,” which leaves Beijing room to keep its controls in place. Private sector forecasters have cut their growth outlook this year for China, though they still expect about 8%, which would be among the world’s strongest. That was down from the 7.3% growth for the first nine months of the year.
Some warned deliveries of goods might be delayed, raising the possibility of shortages of smartphones and other consumer products ahead of the Christmas shopping season.įactory output barely grew in September, expanding by only 0.05% compared with August. That has fueled fears about other developers, though economists say the threat to global financial markets is small.įactories in some provinces were ordered to shut down in mid-September to avoid exceeding official goals for energy use and energy intensity, or the amount used per unit of output. One of the biggest, Evergrande Group, is struggling to avoid defaulting on $310 billion owed to banks and bondholders. “Growth will slow further,” Louis Kuijs of Oxford Economics said in a report.Ĭhinese leaders are trying to steer the economy to more sustainable growth based on domestic consumption instead of exports and investment and to reduce financial risk.Ĭonstruction and housing sales, an important source of demand for steel, copper and other industrial imports, have slowed since regulators ordered developers to reduce their debt levels. But forecasters said even if that happens, activity will weaken before policy changes take effect. The slowdown adds to pressure on Beijing to prop up activity by easing borrowing controls and spending more on building public works. That was down from 1.2% in the April-June period and one of the past decade’s weakest quarters. “Even developed markets, including the U.S., would not be immune to a significant tightening in global financial conditions as a result of a negative China growth shock accompanied by financial stress.”Ĭompared with the previous quarter, the way other major economies are measured, output barely grew in the July-September period, expanding by just 0.2%. “Ripple effects to the rest of the world could be significant" due to weaker Chinese demand for raw materials, said Mo Ji of Fidelity International in a report. Construction, an industry that supports millions of jobs, is slowing as regulators force developers to cut reliance on debt that Chinese leaders worry is dangerously high. Manufacturing has been hampered by official curbs on energy use and shortages of processor chips and other components due to the coronavirus pandemic.
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