Market report and Economic Data

China Q3 GDP below expectations. Should investors remain to invest in China or exit from China?

sedek87
Publish date: Tue, 19 Oct 2021, 06:20 AM
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The headline GDP increased by 4.9% YoY in Q3 – down from 7.9% YoY in Q2. drom this figure it shows many enterprises are in trouble, many people's incomes have decreased, and many people's confidence has been hurt.
 
Various factors contribute to this:
1. Policy challenges from deleveraging the real estate sector, increasing compliance on the tech sector, and the clampdown on tuition centres and the entertainment sectors. The Evergrande crisis is weighing on Chinese property investment and dragging the economy down.
 
2. Nationwide power outages. Although China has responded to the energy crisis by ramping up coal production, the measures will take time to bear fruit. Production restriction and power shortage will likely continue to weigh on Q4 growth.
 
3. Surging prices of raw materials globally, increase in operation cost. 
 
The full-year economic growth of China anticipates below 8.5 per cent, but Beijing remains calm I believe China could still achieve its official GDP goal of 6 per cent. 
 
Looking ahead, this six factor will shape China economy in near term. 
 
1. The government will make appropriate adjustments to its monetary and fiscal policies to address the general shortage of funds for SMEs and break the dullness in the production sector.
 
2. The government will finding ways to absorb the jobless people from the policy hit, for example, relocate labour to other sectors.
 
3. Infrastructure investment from the public sector could support growth, which turn out to be partly true as at least investments in transportation construction was 26.7% YoY YTD. China has planned 102 major projects during the China 14th Five m-Year Plan period, and their implementation should be accelerated.
 
4. Private sector investments grow slower as there have been so many policy changes, which creates uncertainties on business prospects.
 
5. Investments in renewable energies will grow stronger as the recent limited use of coal to generate electricity reflects the importance of renewable energies for China.
 
6. While the global economy was sluggish in the third quarter, China has maintained a strong increase in exports. This is the latest evidence that the world economy cannot decouple from China.
 
Remarks: You may download China GDP report from this link. 
http://www.stats.gov.cn/english/PressRelease/202110/t20211018_1822968.html
 

 

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