Shortages, bankruptcies: in China, growth stalled in the third quarter – archyde

Repeated power cuts forcing companies all over the country to interrupt their activity, virtual bankruptcy of one of the main real estate developers whose debt represents 260 billion euros … Chinese growth in the third quarter was not forthcoming under the best auspices. In fact, the figure released Monday, October 18, 4.9% growth between July and September compared to the third quarter of 2020, is not a good number, even if it corresponds roughly to analysts’ expectations.

In the first quarter, Chinese growth had reached the extravagant level of 18.3%, compared to the first quarter of 2020 marked by the Covid-19 crisis. With 7.9% over one year, growth in the second quarter had done very well: the Chinese export machine was once again running at full speed. At the third, it got stuck.

The current slowdown was expected. A few days ago, the International Monetary Fund revised slightly downwards (8% instead of 8.1% previously), its growth forecast for China for the year 2021. The Chinese government has always is cautious, with a growth forecast of “More than 6%” This year. Visiting the great Canton Trade Fair on October 15, Premier Li Keqiang was reassuring. “China has the right tools to face the economic challenges facing the country (…) and should be able to achieve a growth rate of over 6% ”, he said, acknowledging however that the economy was facing “Many factors of instability and uncertainty”.

Jolts

The difficulties of the real estate developer Evergrande are one of them, even if the Central Bank of China wanted to be reassuring: “Any contagion to the financial sector is controllable”, she said on October 15. Evergrande will not be to the Chinese economy what the bankruptcy of Lehman Brothers was to American finance in 2008. However, the Chinese likely to acquire housing are wary. In September, home sales fell by 30% in around 30 cities.

The congestion of Chinese ports – due to high activity but also a “zero Covid” policy which slows down most operations – considerably increases the cost of logistics. In addition, China, which has closed a number of excessively polluting coal-fired power stations and in fact boycotted Australian coal, is suffering from a fuel shortage despite rising imports, mainly from Indonesia and Russia.

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