China's economic growth continued to slide in the third quarter of this year with likely wide repercussions for the region. China is one of the region's main engines and any slowdown in this economic powerhouse impacts demand for regional goods and services. Growth slowed to a worse-than-expected 4.9 per cent in July to September, after falling to 7.9 per cent in the second quarter from a high of 18.3 per cent in the January to March period. This trend is expected to continue to the end of this year, and possibly into the first quarter of next year. Some analysts have lowered China's full-year growth forecast to around 8 per cent from about 8.4 per cent. Next year's growth is likely to be lower, possibly under 6 per cent.
The Chinese economy's downward slide has come after an impressive rebound from a slump last year caused by the Covid-19 pandemic. There are many factors for this, including the Delta variant outbreaks in the summer that led to tepid consumption growth and supply chain disruptions as holidays were curtailed and some ports closed temporarily. The pandemic can be expected to continue playing havoc with the economy as it is doing so around the world. It has contributed to the global energy crunch that has also hit China and disrupted its manufacturing activities, adding to its economic woes. But China's power shortages are also caused by its efforts to cut carbon emissions through reducing coal production. For now, it is easing energy shortfalls by increasing coal production again. But it needs to coordinate the transition to clean energy better and move on it faster if it is to avoid such power crunches and yet meet its climate change commitments. Indeed, much of the slowdown is linked to China's policy moves, including regulatory crackdowns to rein in its freewheeling Internet tech sector and its speculative property sector, with the latter making up 25 per cent of the country's gross domestic product including real estate-related industries. These are part of its policy shift away from the current debt-fuelled, investment and export-led economic model to one that is driven by consumption, innovation and productivity growth. It is also about tackling China's income and wealth inequality including through taming the property sector to make housing more affordable and the private education sector to make raising children less expensive.