China’s GDP growth misses target as property and zero Covid woes rise

China's GDP growth misses target as property and zero Covid woes rise
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China’s gross domestic product grew 3.9 percent year-on-year in the third quarter, well below its full-year target, underscoring the extent of the economic problems facing the country.

Analysts’ annual growth rate of 3.3 percent, which Bloomberg had forecast, fell short of China’s full-year target of 5.5 percent — the lowest in three decades.

China’s economy is struggling with a property crisis and strict zero-covid controls and lockdowns, which have greatly limited the spread of the virus and also slowed consumer activity.

Monday’s release of the data prompted a broad sell-off in Chinese stocks, with Hong Kong’s Hang Seng China Enterprises index down 5.7 percent and the CSI 300 index of Shanghai- and Shenzhen-listed shares falling slightly. 2 percent.

“It’s panic selling,” said Dickie Wong, head of research at Kingston Securities in Hong Kong. “It is clear that investors are not sure about the future of the Chinese economy.”

The release of the data, which has been delayed since last Tuesday, comes after Chinese President Xi Jinping extended his rule for an unprecedented third term and strengthened political power Last week at the 20th Congress of the Communist Party.

Although the government did not provide an explanation for the delay, the move was seen as an attempt to avoid distracting attention from the congress, which takes place once every five years and overhauls the upper echelons of the Communist Party.

At the convention, Xi made few references China’s economic weaknesses and praised the measures to combat the coronavirus, which include daily testing and quarantine rules that effectively shut the country off from the rest of the world. He said he was China’s best epidemiologist in the build-up to the incident on the schedule for rest.

Growth in the third quarter outpaced just 0.2 percent growth in the second quarter, when Shanghai, China’s largest city and financial hub, was under a two-month-long lockdown.

Retail sales rose just 2.5 percent in September, missing a Reuters forecast of 3.3 percent.

Industrial production, which fueled China’s growth in the first two years of the pandemic, rose 6.3 percent last month. That was better than analysts’ expectations of 4.5 percent, as the country’s manufacturing industry recovered from supply chain disruptions and shutdowns.

Investments in fixed assets increased by 5.9 percent in the first nine months of the year. However, property sales measured by residential area fell by 22 percent, new construction starts by 38 percent, and property investment by 8 percent.

Policymakers have gradually eased key policy rates this year and taken steps to speed up the completion of unfinished housing projects that have been delayed after a series of defaults by highly indebted developers such as Evergrande.

But they are there stopped the implementation of major stimulus measures and against the local stock market, which is now down 34 percent after factoring in the weaker currency and the renminbi’s decline against the dollar.

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