China’s economic growth picks up but remains weak due to lockdowns

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BEIJING (AP) — China’s economic growth accelerated in the last quarter but remains among the weakest in decades as the ruling Communist Party attempts to reverse a slowdown while enforcing virus and virus controls and a debt crackdown in its vast real estate sector.

The world’s second-largest economy grew 3.9% year on year in the three months to September, compared with 0.4% in the previous quarter, official data showed on Monday.

The planned release of the data last week was postponed as the ruling Communist Party met to award President Xi Jinping a new term as leader. Investors and the Chinese public watched the meeting for initiatives to boost the economy or reduce the impact of the “Zero COVID” strategy that has shut down cities and disrupted business, but none were announced. .

The improvement is “primarily the result of more flexible anti-virus controls” that isolate individual buildings or neighborhoods instead of cities, ING’s Iris Pang said in a report. But she said more lockdowns are “still a big uncertainty”.

“This uncertainty means that the effectiveness of growth policy would be compromised,” Pang said.

No data was immediately released on growth from the previous quarter, as other major economies do. In the quarter ending in June, the economy shrank 2.6% from the previous three-month period.

Growth slipped in the second half of 2021 after debt controls, which regulators say are dangerously high, caused a slowdown in real estate, one of China’s main economic drivers. Growth fell to 4% from a year earlier in the last quarter.

Beijing has eased mortgages and local governments have taken over some unfinished projects to ensure buyers get apartments. But regulators are sticking to debt limits that have forced developers into bankruptcy and caused some larger competitors to miss payments to bondholders.

The ruling party’s “Zero COVID” strategy has temporarily shut down Shanghai and other industrial hubs despite rising costs and public frustration. This has turned into protests in some regions at a time when other countries are relaxing virus controls.

For the first nine months of 2022, growth was 3% from a year earlier, just half the official ruling party target of 5.5%. Leaders stopped talking about that goal but promised easier loans and other measures to spur growth.

The International Monetary Fund and private sector forecasters have cut their annual growth outlook to just 3%. It would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% after much of the economy shut down for two months to contain the coronavirus outbreak.

The crisis is hurting China’s trading partners by lowering demand for imported oil, food and consumer goods.

Repeated shutdowns and uncertainty over business terms have devastated entrepreneurs who generate wealth and jobs. Small businesses and restaurants have closed. Others say they struggle to stay afloat.

Beijing is using cautious, targeted stimulus instead of general spending, a strategy that will take longer to show results, economists say. Chinese leaders fear that too much spending could drive up politically sensitive housing costs or corporate debt.

Growth for the first half of the year was 2.5% from a year earlier, one of the lowest levels in three decades.


National Bureau of Statistics (in Chinese):

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