China economy, which has enjoyed a meteoric rise among the world’s major economies, is under pressure. As bad news piles up, the economy has taken a turn for the worse, both internally and externally.
“If omni-directional regulations are not dealt with in a situation where there is a clear before and after, there is no guarantee for next year.”
The National Bureau of Statistics of China reported on the 18th that the country’s GDP growth rate for the third quarter was 4.9% versus the same period last year. The rate is lower than both the 7.9% rate in the previous quarter and the 5.2% rate in the previous quarter, and is the lowest in a year.
Despite tight controls and stimulus measures, China quarterly GDP growth was the only positive growth in the world last year. It increased to 18.3% in the first quarter of this year. However, following the Evergrande crisis, negative factors have undermined growth. These include the rapid cooling of the property market, increasing power shortages, disruptions in global supply chains, rising international commodity prices, floods, etc. It has returned to the same level as in the third quarter of last year.
“The Evergrande crisis may exacerbate the economic slowdown in China’s residential property sector,” Oxford Economics said.
No immediate solution.
Experts say there is no immediate solution to the crisis. Worries about debt and property bubbles are troubling. Additionally, the ease of monetary policy risks hampering President Xi Jinping’s consolidation of power. Further, rising international commodity prices, electricity and energy shortages are seen as problems in other countries.
Flooding is a natural disaster.
“China’s energy crisis impacts will be in full swing next year, including Evergrande default and coal shortages,” said Raguram Rajan. He is the former chief economist at the International Monetary Fund (IMF) and former chairman of the Reserve Bank of India (RBI).