Editorial | Slowing growth an opportunity for China to address core issues
- How leaders respond to these challenges is critical to achievement of President Xi Jinping’s goal of common prosperity
So closely watched is China’s economic growth that a single quarterly statistic that does not meet expectations prompts analysts to read a lot into it. The latest figure, for example, is seen as stoking the fear of stagflation, or slow growth amid high inflation and unemployment. To restore stable growth, the real challenge for policymakers lies in tackling fundamental structural issues that remain unaddressed.
China’s gross domestic product for the three months ended September grew by 4.9 per cent, failing modest market expectations of 5 per cent and well under the post-pandemic rebounds in the previous two quarters of 18.3 per cent and 7.9 per cent, respectively.
Industrial production disappointed with 3.1 per cent growth last month, compared with a 5.3 per cent rise in August. Better-than-expected retail sales growth at 4.4 per cent last month were a silver lining.
Several factors are to blame. Domestic consumption remains weak, contrary to expectations it will shoulder a greater share of growth. Exports sustained their rebound, but face an uncertain global environment.
Weak consumption reflected a power crisis, outbreaks of Covid-19, disasters such as floods and regulatory crackdowns on certain growth sectors.
Adding to woes are rising prices of raw materials. As a result, GDP on paper looked to be slowing down.
Property investment, a growth driver in previous quarters, has slowed dramatically because of central government policies and uncertainty created by the property giant Evergrande’s debt saga.
