Kevin Yao

BEIJING, (Reuters) – China’s economy grew in China at an unlikely pace of 1% in the third quarter. This was due to power supply shortages, bottlenecks, and sporadic COVID-19 epidemics. It is also raising tensions with policymakers, amid growing jitters about the property sector.

On Monday, data will be released showing that gross domestic product (GDP), which rose 5.2% from a previous – the slowest rate since the third quarter 2020 – and a decline from 7.9% recorded in the second quarter. A Reuters poll indicated this.

This would be a significant decrease from the 18.3% growth in the quarter before, where the year-on–year growth rate was severely impacted by the low comparison during the COVID-induced depression of early 2020.

According to the poll, quarterly growth was forecasted to fall to 0.5% from 1.3% for the second quarter.

Although the world’s second largest economy is now recovering from the pandemic, the recovery is slowing. This is due to a faltering manufacturing sector, soft consumer spending, and slower property sectors as the policy restrictions bite.

Citi economists wrote in a note, “The potential faster-than-expected slowdown due to energy shortage and contagion effect as a result of Evergrande default will require further easement of monetary policies.”

As China Evergrande Group, a major developer in China, struggles with debts of more than $300 Billion dollars worldwide, global concerns about credit risk have grown.

Chinese leaders, fearful that a persistent property bubble could undermine the country’s long-term ascent, are likely to maintain tough curbs on the sector even as the economy slows, but could soften some tactics as needed, policy sources and analysts said.

Premier Li Keqiang stated that China is equipped to handle economic problems despite slower growth. The government remains confident in its ability to achieve full-year developmental goals

Reuters polled analysts and found that they expected the PBOC would keep the banks’ reserve requirement ratios (RRR) the same in the fourth quarter before delivering 50 basis points in the first quarter 2022.

China’s third quarter GDP data will be released Monday (0200 GMT), alongside September factory output and fixed asset investment.

Industrial output in September is forecast to increase 4.5% over a previous year, the lowest rate since May 2020. Retail sales growth should increase to 3.3%, up from 2.5% August.