China’s economy was the first to reveal the green shoots of recovery. However, judging by the latest statistics, there is still a long way to the full recovery. The world’s second largest economy logged serious contraction in its gross domestic product in Q3 2021. Both independent experts and China’s authorities acknowledge the gravity of the situation.
China’s economy is facing a few headwinds dragging down the economic growth. First, COVID-19 is still denting the economic output despite Beijing’s huge efforts. Second, irregular power supply is to blame for technical faults and even total blackouts at Chinese factories. Besides, the post-crisis period is not the best time for Beijing to step up pressure on domestic entrepreneurs. As a result, private education and the high-tech sector are taking the brunt of Beijing’s tough rhetoric. Another headwind is cracks in China’s property market that affect other economic sectors. Last but not least, newly imposed restrictions due to a COVID resurgence undermine consumer spending and erode exports.
Experts suppose that China’s economic recovery rests on soft fundamentals at the current stage. In other words, lots of domestic businesses in the service sector and small-sized companies are struggling in the face of adversity. China’s GDP annual growth slumped to 4.9% in Q3 2021, the weakest growth over the last 9 months. Previously, China’s economy expanded 18.3% in Q1 and then slowed down to 7.9% in Q2.
