March 25, 2023

Dubai Week

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China’s economic growth is weakening as construction slows

China’s economic growth has been negatively affected by the recession and energy shortages in construction, which warns of a possible shock to its trading partners and global financial markets.

China’s economy, the world’s second-largest, grew by just 4.9 percent in the three months to September last year, down from 7.9 percent in the previous quarter, government data showed Monday. Industrial production, retail and construction investment and other fixed assets have weakened.

The production process has been affected by measures such as official cuts in energy use, lack of computer chips and other components due to the novel corona virus infection. Chinese leaders believe that construction, which will retain millions of jobs, has reached dangerous levels as developers are forced to reduce their reliance on debt.

Fidelity International said in a statement that “the effects of this could be felt in other parts of the world” due to China’s weak demand for raw materials. Even developed markets, including the United States, will not be safe from the still-stagnant global financial situation as a result of China’s growth shock aide and financial conditions.

Production increased by only 0.2% in the July-September period compared to the previous quarter, which was 1.2% in the April-June period, one of the weakest performance periods of the last decade.

The recession is putting more pressure on Beijing to ease borrowing restrictions and spend more to create public jobs. But even if that happens, observers argue that activity will slow down before policy change pays off.