In the third quarter, China’s economy grew at its weakest pace in a year, hampered by power shortages and real estate wobbles, illustrating the struggle facing officials as they try to shore up a sagging recovery while reining in the real estate sector.

The Chinese Communist Party’s (CCP) ban on Australian coal imports has resulted in rolling power disruptions and business shutdowns, which has slowed both the export economy and home consumption and resulted in water shortages.

The world’s second-largest economy faces numerous challenges, including China’s Evergrande debt crisis, persistently slow supply chains, and a severe power crisis that has pushed factory production to its weakest levels since early 2020. The country still enforces strict control measures against COVID-19.

The CCP has been suffered from the growing “nearshoring” trend, which refers to businesses shifting their manufacturing operations to nations that are significantly closer to their primary markets. In addition, fundamental trade factors such as product supply chains that start in China are still being affected, among other things, by pandemic-induced labor shortages and limited resources.

Hence, shipping expenses from China have just increased tenfold. Rising gasoline prices and commodity scarcity will almost certainly amplify this trend.

On the back of the poor statistics, analysts at Barclays trimmed their fourth-quarter prediction by 1.2 percentage points to 3.5%. Meanwhile, Reuters reported that ANZ analysts reduced their forecast for China’s GDP growth in 2021 from 8.3% to 8.0%.

Despite the inflated gross domestic product (GDP) figures, these converging causes drive the Chinese economy negatively. Chinese customers, for example, have a 34% savings rate and aren’t spending their money. In 2021, they will save more than they did in 2020. The gross savings rate is greater than 45%.

“Most of the (negative) factors are policy-driven … the economy is having a lot of pain points, and these pain points are not going away soon because policies are here to stay, and therefore it will continue into 2022,” said Iris Pang, ING’s senior economist for Greater China.

The real estate market’s collapse is also a direct effect of Xi Jinping’s leadership over the last eight years. Millions of Chinese residents have lost large quantities of money, if not their entire life savings, in China’s collapsing real estate market. Essentially, Xi’s errors have caused slowdowns in the Chinese economy’s two main engines of growth, putting tremendous strain on the CCP and the country as a whole.

According to a statement made on Saturday, Oct. 23, by the National People’s Congress—China’s rubber-stamp legislature—the state council, China’s cabinet, will expand pilot programs to tax residential and commercial property in cities.

New building starts fell for the sixth month in a row in September, the longest streak of monthly losses since 2015. Cash-strapped developers cut back on investment and postponed projects due to tighter borrowing limitations, Reuters reported.

In September, China’s industrial production disappointed the market, rising only 3.1% from a year earlier, down from 5.3% in August, and falling short of the forecasted 3.9% increase.

At the same time, data released on Monday indicated that China’s raw coal and coking coal output fell by 0.9% and 9.6%, respectively, from a year ago in September, causing another wave of price hikes for both thermal and coking coal futures.

“Since entering the third quarter, domestic and overseas risks and challenges have increased,” Fu Linghui, a representative for the National Bureau of Statistics, said during a press conference Monday in Mandarin, CNBC reported.

Growth slowed to 0.2% in July-September, down from a downwardly revised 1.2% in the previous quarter.

Premier Li Keqiang stated last week that, despite slowing growth, China has adequate tools to deal with economic issues and voiced confidence in meeting full-year development targets.

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