China has failed to break a deflationary cycle and is now on course for the longest sequence of economy-wide price drops since the 1960s.
According to economists, this exposes a crucial weakness likely concealed by a GDP recovery at last year's end.
Official data are expected to reveal that deflation continued for the second consecutive year in 2024, as predicted by the majority of experts.
According to major Wall Street banks like Citigroup and JPMorgan Chase, it will continue through this year.
That will mark a stretch not seen since the great leap forward era of Mao Zedong in the 1960s when China experienced a recession and a famine that killed millions of people.
<h2>China&rsquo;s deflation threat causes concern</h2>
According to a Bloomberg poll of economists, the gross domestic product deflator will hit minus 0.2 per cent in 2025.
However, the economy is still predicted to have risen at a quicker speed in real terms in the December quarter.
To give a little context, the average in the ten years preceding the pandemic was 3.4 per cent.
If Chinese exporters are forced to seek internal consumers due to the impending trade war with the US, the situation might become much more dire for the country.
The data on Friday will provide a view of the struggling property market and retail sector.
That comes just days before Donald Trump's return to the white house.
He has threatened trade tariffs as high as 60 per cent on imports from China.
That has the potential to destroy commerce with the world's second-largest economy.
(With inputs from the agencies)

Business & Economy: Official data are expected to reveal that deflation continued for the second consecutive year in 2024, as predicted by the majority of experts.

China has failed to break a deflationary cycle and is now on course for the longest sequence of economy-wide price drops since the 1960s. According to economists, this exposes a crucial weakness likely concealed by a GDP recovery at last year's end. Official data are expected to reveal that deflation continued for the second consecutive year in 2024, as predicted by the majority of experts. According to major Wall Street banks like Citigroup and JPMorgan Chase, it will continue through this year. That will mark a stretch not seen since the great leap forward era of Mao Zedong in the 1960s when China experienced a recession and a famine that killed millions of people. China’s deflation threat causes concern According to a Bloomberg poll of economists, the gross domestic product deflator will hit minus 0.2 per cent in 2025. However, the economy is still predicted to have risen at a quicker speed in real terms in the December quarter. To give a little context, the average in the ten years preceding the pandemic was 3.4 per cent. If Chinese exporters are forced to seek internal consumers due to the impending trade war with the US, the situation might become much more dire for the country. The data on Friday will provide a view of the struggling property market and retail sector. That comes just days before Donald Trump's return to the white house. He has threatened trade tariffs as high as 60 per cent on imports from China. That has the potential to destroy commerce with the world's second-largest economy. (With inputs from the agencies)

China faces the longest deflation streak since the Mao era in the 1960s

China is focused on changing its tax structure on residential property transactions. This they are doing to lower the cost of ownership and to try to extend fresh incentives to a wider pool of buyers.

China is focused on changing its tax structure on residential property transactions. This they are doing to lower the cost of ownership and to try to extend fresh incentives to a wider pool of buyers. These are some measures taken by the nations government to arrest a four-year slump, according to a detailed report by the South China Morning Post. Benefits for first time buyers from December 1 First-time buyers will enjoy a 1 per cent deed tax on homes measuring 140 sq m (1,507 sq ft) and below from December 1, the Ministry of Finance said on Wednesday, while a 1.5 per cent rate will be taxed on purchase of units above that size. The existing threshold is 90 sq m, whereas for second home purchases, a 2 per cent deed tax will only hit transactions involving units starting from 140 sq m instead of 90 sq m, it added, the South China Morning Post report explained further. The new structure will be standardised nationwide, the concerned ministry said, implying the rates in top tier-1 cities like Beijing, Shanghai, Guangzhou and Shenzhen will fall from 3 per cent for transactions involving larger units and second home purchases. Views of the Vice President of E-House China Real Estate Research Institute “It’s a pretty sizeable move which will directly boost demand for medium to large-sized homes, specifically those above 90 sq m, by reducing transaction costs,” said Yan Yuejin, vice-president of the Shanghai-based E-House China Real Estate Research Institute. Rates will be more aligned nationwide, further supporting the market recovery, he added, as explained in the South China Morning Post report. The plans to boost housing transactions follow calls from regional authorities in recent months to remove the distinctions between standard and non-standard homes. In mainland China, houses measuring at least 144 sq m are deemed above average and non-standard, the South China Morning Post explained further. In the later part of September, the Chinese administration introduced these remedial measures to rescue the nation’s property and stock markets. The overall goal was to revive the economy, after initial hiccups with stopgap measures since the end of the Covid-19 pandemic. It is also crucial to note that the Chinese economy grew 4.6 per cent in the third quarter, slowing from 4.7 per cent in the preceding three months, below the official 5 per cent annual target, according to official figures. Possibility of more incentives remain More incentives are anticipated, according to Jeff Zhang, an equity analyst in Hong Kong at US research firm Morningstar. Home sellers could expect a 5 per cent value-added tax on properties sold within two years to be removed, he said, while a potential reduction in personal income taxes could further boost overall consumption. In another move to support homebuyers, the government in the southern technological hub of Shenzhen is considering handing out bigger loans to support homebuyers. It’s mulling raising the upper limit of housing provident fund loans for individuals to 600,000 yuan from 500,000 yuan. The limit for households could be raised to 1.1 million yuan from 900,000 yuan. Therefore, as things evolve, market participants and global investors will carefully follow these developments in China's crisis hit property market. As these developments along with the government support is going to define the trajectory of the Chinese economy.

To boost property sales, China unveils new tax breaks: Report

Goldman Sachs has recently upgraded its growth forecast for China, highlighting a positive shift in the country's economic landscape.

The bank expects China’s gross domestic product to expand 4.9 per cent&nbsp;this year, up from 4.7 per cent previously. It also lifted its growth prediction for next year to 4.7 per cent from 4.3 per cent, according to a report released recently.

This adjustment comes as various indicators suggest a robust recovery following a challenging period marked by strict COVID-19 restrictions and a sluggish rebound as detailed in a report by Bloomberg.

Factors driving the upgrade<o:p></o:p>

The Bloomberg report further elaborated that, “The latest round of China stimulus clearly indicates that policymakers have made a turn on cyclical policy management and increased their focus on the economy,” Goldman economists including Hui Shan and Lisheng Wang wrote.

<o:p></o:p>

Several key factors have contributed to this optimistic outlook. Firstly, the Chinese government has implemented measures aimed at stimulating domestic demand, which have begun to yield results. Consumer spending is on the rise, bolstered by increased confidence among households and businesses alike. Additionally, infrastructure investments have gained momentum, further propelling economic activity.<o:p></o:p>

Goldman Sachs analysts noted that the recent data reflects a more resilient manufacturing sector, which has shown signs of stabilisation. The bank's report emphasises that improvements in exports and industrial production are critical components of this recovery narrative. As global supply chains continue to normalise, China's manufacturing capabilities are expected to play a pivotal role in meeting international demand.<o:p></o:p>

Implications for global markets<o:p></o:p>

This upward revision of China's growth forecast carries significant implications for global markets. As one of the world's largest economies, China's performance is closely watched by investors worldwide. A stronger Chinese economy could lead to increased demand for commodities and other goods, potentially driving prices higher.<o:p></o:p>

Moreover, the anticipated growth may influence central banks' monetary policies across the globe. With China recovering, there is a possibility that other economies could benefit from enhanced trade relationships and investment opportunities. Analysts suggest that countries heavily reliant on exports to China may experience a boost in their economic performance as well.<o:p></o:p>

Investment strategies moving forward<o:p></o:p>

In light of this revised outlook, investors are urged to reassess their strategies regarding exposure to Chinese markets. As consumer confidence grows and infrastructure projects gain traction, sectors such as technology, consumer goods, and construction may present lucrative opportunities.<o:p></o:p>

Goldman Sachs' report serves as a reminder of the interconnectedness of global economies. As China navigates its recovery journey, stakeholders must remain vigilant and adaptable to the evolving landscape. The bank's insights underscore the importance of staying informed about economic trends that could shape investment decisions in the coming months.<o:p></o:p>

Hence, Goldman Sachs' upgraded growth forecast for China reflects a broader narrative of recovery and resilience. As the world's second-largest economy shows signs of revitalisation, both local and international investors are poised to benefit from this positive trajectory.<o:p></o:p>

Goldman Sachs has recently upgraded its growth forecast for China, highlighting a positive shift in the country's economic landscape. The bank expects China’s gross domestic product to expand 4.

Goldman Sachs has recently upgraded its growth forecast for China, highlighting a positive shift in the country's economic landscape. The bank expects China’s gross domestic product to expand 4.9 per cent this year, up from 4.7 per cent previously. It also lifted its growth prediction for next year to 4.7 per cent from 4.3 per cent, according to a report released recently. This adjustment comes as various indicators suggest a robust recovery following a challenging period marked by strict COVID-19 restrictions and a sluggish rebound as detailed in a report by Bloomberg. Factors driving the upgrade The Bloomberg report further elaborated that, “The latest round of China stimulus clearly indicates that policymakers have made a turn on cyclical policy management and increased their focus on the economy,” Goldman economists including Hui Shan and Lisheng Wang wrote. Several key factors have contributed to this optimistic outlook. Firstly, the Chinese government has implemented measures aimed at stimulating domestic demand, which have begun to yield results. Consumer spending is on the rise, bolstered by increased confidence among households and businesses alike. Additionally, infrastructure investments have gained momentum, further propelling economic activity. Goldman Sachs analysts noted that the recent data reflects a more resilient manufacturing sector, which has shown signs of stabilisation. The bank's report emphasises that improvements in exports and industrial production are critical components of this recovery narrative. As global supply chains continue to normalise, China's manufacturing capabilities are expected to play a pivotal role in meeting international demand. Implications for global markets This upward revision of China's growth forecast carries significant implications for global markets. As one of the world's largest economies, China's performance is closely watched by investors worldwide. A stronger Chinese economy could lead to increased demand for commodities and other goods, potentially driving prices higher. Moreover, the anticipated growth may influence central banks' monetary policies across the globe. With China recovering, there is a possibility that other economies could benefit from enhanced trade relationships and investment opportunities. Analysts suggest that countries heavily reliant on exports to China may experience a boost in their economic performance as well. Investment strategies moving forward In light of this revised outlook, investors are urged to reassess their strategies regarding exposure to Chinese markets. As consumer confidence grows and infrastructure projects gain traction, sectors such as technology, consumer goods, and construction may present lucrative opportunities. Goldman Sachs' report serves as a reminder of the interconnectedness of global economies. As China navigates its recovery journey, stakeholders must remain vigilant and adaptable to the evolving landscape. The bank's insights underscore the importance of staying informed about economic trends that could shape investment decisions in the coming months. Hence, Goldman Sachs' upgraded growth forecast for China reflects a broader narrative of recovery and resilience. As the world's second-largest economy shows signs of revitalisation, both local and international investors are poised to benefit from this positive trajectory.

Goldman Sachs upgrades China’s growth forecast amid economic recovery

China’s rubber-stamp parliament, the National People's Congress (NPC), is all set to begin its annual session on Sunday, where President Xi Jinping is expected to unveil the biggest government reshuffle in a decade as Beijing confronts a host of issues at home and abroad.

The two sessions, which are being held in the wake of Xi securing a record-breaking third term as the supreme leader, will witness the government outlining its policy goals, including targeting high economic growth.

On Saturday, the session began with the opening meeting of the top advisory body the Chinese People's Political Consultative Conference (CPPCC) while its national legislature, the National People's Congress (NPC), will begin its session on Sunday.

Over 5,000 deputies and advisers will participate in the two sessions that will last for over a week.

Notably, the NPC will witness the appointment of a new Premier. It is widely expected that Li, who will be retiring, will be succeeded by President Xi Jinping's loyalist Li Qiang.

Except for Xi, 69, all top officials will be replaced as part of the practice of changing the leadership team every 10 years.

Apart from that, China is also expected to increase its defence budget, the second biggest after the US, citing "complex security challenges".

Ahead of the session, NPC spokesman Wang Chao indicated that China will announce an increase in its defence budget. He did not disclose the amount, which he said will be formally unveiled on Sunday.

Last year, China had earmarked $230 billion for defence—a 7.1 per cent rise over that of the previous year&nbsp;while the defence spending of US that year amounted to $777.1 billion.

Wang defended China's steady increases in annual defence budgets, saying that the country’s defence spending as a share of the GDP was lower than the world average.

(With inputs from agencies) 
&nbsp;

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China’s rubber-stamp parliament, the National People's Congress (NPC), is all set to begin its annual session on Sunday, where President Xi Jinping is expected to unveil the biggest government reshuffle in a decade as Beijing confronts a host of issues at home and abroad.

China’s rubber-stamp parliament, the National People's Congress (NPC), is all set to begin its annual session on Sunday, where President Xi Jinping is expected to unveil the biggest government reshuffle in a decade as Beijing confronts a host of issues at home and abroad. The two sessions, which are being held in the wake of Xi securing a record-breaking third term as the supreme leader, will witness the government outlining its policy goals, including targeting high economic growth. On Saturday, the session began with the opening meeting of the top advisory body the Chinese People's Political Consultative Conference (CPPCC) while its national legislature, the National People's Congress (NPC), will begin its session on Sunday. Over 5,000 deputies and advisers will participate in the two sessions that will last for over a week. Notably, the NPC will witness the appointment of a new Premier. It is widely expected that Li, who will be retiring, will be succeeded by President Xi Jinping's loyalist Li Qiang. Except for Xi, 69, all top officials will be replaced as part of the practice of changing the leadership team every 10 years. Apart from that, China is also expected to increase its defence budget, the second biggest after the US, citing "complex security challenges". Ahead of the session, NPC spokesman Wang Chao indicated that China will announce an increase in its defence budget. He did not disclose the amount, which he said will be formally unveiled on Sunday. Last year, China had earmarked $230 billion for defence—a 7.1 per cent rise over that of the previous year while the defence spending of US that year amounted to $777.1 billion. Wang defended China's steady increases in annual defence budgets, saying that the country’s defence spending as a share of the GDP was lower than the world average. (With inputs from agencies) WATCH WION LIVE HERE

Economy, defence budget hike, govt reshuffle among key steps likely in Chinese parliament’s annual session

Rishi Sunak and Boris Johnson met each other on Saturday. A day later, the former UK Prime Minister ruled himself out of the race to be the next PM, suggesting the two Tory leaders had reached an agreement in the meeting. In other news,&nbsp;data showed China's GDP grew by 3.9 per cent compared to the same period, a year ago.

Click here to read more:&nbsp;&nbsp;

<a href="https://www.wionews.com/world/rishi-sunak-on-course-to-become-next-uk-pm-as-boris-johnson-pulls-out-of-race-527856">Rishi Sunak on course to become next UK PM as Boris Johnson pulls out of race</a>

Rishi Sunak seems all set to become the next British prime minister with the former finance minister gaining the support of several top leaders in the Conservative Party. Sunak’s bid was further strengthened on Sunday as former PM Boris Johnson ruled himself out of the leadership race.

<img src="https://cdn.wionews.com/sites/default/files/styles/story_page/public/2022/10/24/305780-00032ly9xa.jpg" />

<a href="https://www.wionews.com/world/russia-warns-of-uncontrolled-escalation-after-fresh-bout-of-missile-drone-strikes-on-ukraine-527857">Russia warns of 'uncontrolled escalation' after fresh bout of missile, drone strikes on Ukraine</a>

After being pushed back by the Ukrainian troops for the better part of the last few weeks, Russia is gearing up for a comeback. Reportedly, Moscow on Sunday bombarded missiles and drones in the southern Ukrainian municipality of Mykolaiv, per a report by Reuters, destroying numerous apartment blocks in the process.&nbsp;

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<a href="https://www.wionews.com/world/china-reports-39-gdp-growth-in-q3-up-from-the-04-recorded-in-q2-527867">China reports 3.9% GDP growth in Q3, up from the 0.4% recorded in Q2</a>

A day after the Communist Party of China (CPC) Congress ended with Xi Jinping securing a third term in the office, Beijing released its&nbsp;third-quarter gross domestic product figures. The data showed China's GDP grew by 3.9 per cent compared to the same period, a year ago.

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<a href="https://www.wionews.com/world/macron-to-hold-talks-with-italy-pm-meloni-presidency-527852">Macron to hold talks with Italy PM Meloni: Presidency</a>

The French presidency said on Sunday (October 23) that French President Emmanuel Macron will meet Italy's new Prime Minister Giorgia Meloni later in the day. Macron is currently on an official visit to Italy.

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<a href="https://www.wionews.com/videos/china-what-will-be-xi-jinpings-challenges-in-historic-third-term-latest-news-wion-527860">WATCH |&nbsp;China: What will be Xi Jinping's challenges in historic third term?</a>

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Rishi Sunak and Boris Johnson met each other on Saturday. A day later, the former UK Prime Minister ruled himself out of the race to be the next PM, suggesting the two Tory leaders had reached an agreement in the meeting.

Rishi Sunak and Boris Johnson met each other on Saturday. A day later, the former UK Prime Minister ruled himself out of the race to be the next PM, suggesting the two Tory leaders had reached an agreement in the meeting. In other news, data showed China's GDP grew by 3.9 per cent compared to the same period, a year ago. Click here to read more: Rishi Sunak on course to become next UK PM as Boris Johnson pulls out of race Rishi Sunak seems all set to become the next British prime minister with the former finance minister gaining the support of several top leaders in the Conservative Party. Sunak’s bid was further strengthened on Sunday as former PM Boris Johnson ruled himself out of the leadership race. Russia warns of 'uncontrolled escalation' after fresh bout of missile, drone strikes on Ukraine After being pushed back by the Ukrainian troops for the better part of the last few weeks, Russia is gearing up for a comeback. Reportedly, Moscow on Sunday bombarded missiles and drones in the southern Ukrainian municipality of Mykolaiv, per a report by Reuters, destroying numerous apartment blocks in the process. China reports 3.9% GDP growth in Q3, up from the 0.4% recorded in Q2 A day after the Communist Party of China (CPC) Congress ended with Xi Jinping securing a third term in the office, Beijing released its third-quarter gross domestic product figures. The data showed China's GDP grew by 3.9 per cent compared to the same period, a year ago. Macron to hold talks with Italy PM Meloni: Presidency The French presidency said on Sunday (October 23) that French President Emmanuel Macron will meet Italy's new Prime Minister Giorgia Meloni later in the day. Macron is currently on an official visit to Italy. WATCH | China: What will be Xi Jinping's challenges in historic third term? ×

Morning news brief: Rishi Sunak leads the PM race, China's Q3 GDP figures released and more

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China.

It has all taken a toll on China’s economy, an essential engine for global growth.

The National Bureau of Statistics announced Monday that China’s economy increased by 4.9% in the third quarter, compared to the same period last year; the period was markedly slower than the 7.9% increase the country notched in the previous quarter. Industrial output, the mainstay of China’s growth, since the early days of the pandemic.

Two bright spots prevented the economy from stalling. Exports remained strong. And families, particularly prosperous ones, resumed spending money on restaurant meals and other services in September, as China succeeded once again in quelling small outbreaks of the coronavirus. Retail sales were up 4.4% in September from a year ago.

Chinese officials are showing signs of concern, although they have refrained from unleashing a big economic stimulus. Their own efforts, though, are part of the current economic challenges.

“Though the government’s economic policies during the past months have some social benefits, they have also somewhat trimmed economic growth lately,” said George Yu, an economist at Renmin University in Beijing.

In recent months, the government has unleashed a raft of measures to address income inequality and tame businesses, in part with the goal of protecting the health of the economy. But those efforts, including penalizing tech companies and discouraging real estate speculation, have also weighed on growth in the current quarter.

The government had also imposed limits on energy use as a part of a broader response to climate change concerns. Now, the power shortages are hurting industry, and the country is rushing to burn more coal.

“The economy is sluggish,” said Yang Qingjun, the owner of a corner grocery store in an aging industrial neighborhood of shoe factories in Dongguan, near Hong Kong. Power cuts have prompted nearby factories to reduce operations and eliminate overtime pay. Local workers are living more frugally.

“Money is hard to earn,” Yang said.

<h2>Trying to Solve the Real Estate Question</h2>

Urbanization was once a great engine of growth for China. The country built spacious apartments in modern high-rises for hundreds of millions of people, with China producing as much steel and cement as the rest of the world output combined, if not more.

Now, real estate — in particular, the debt that developers and homebuyers amassed — is a major threat to growth. The country’s biggest developer, China Evergrande Group, faces a serious cash shortage that is already rippling through the economy.

Construction has ground to a halt at some of the company’s 800 projects as suppliers wait to be paid. Several smaller developers have had to scramble to meet bond payments.

This could create a vicious cycle for the housing market. The worry is that developers may dump large numbers of unsold apartments on the market, keeping homebuyers away as they watch to see how far prices may fall.

“Some developers have encountered certain difficulties, which may further affect the mood and confidence of buyers, causing everyone to postpone buying a house,” said Ning Zhang, a senior economist at UBS.

The fate of Evergrande has broader import for the long-term health of the economy.

Officials want to send a message that bond buyers and other investors should be more wary about lending money to debt-laden companies like Evergrande and that they should not assume that the government will always be there to bail them out. But the authorities also need to make sure that suppliers, builders, homebuyers and other groups are not badly burned financially.

These groups “will get made more whole than the bondholders, that’s for sure,” predicted David Yu, a finance professor at the Shanghai campus of New York University.

<h2>Addressing Difficulties in Heavy Industry</h2>

As electricity shortages have spread across eastern China in recent weeks, regulators have cut power to energy-intensive operations like chemical factories and steel mills to avoid leaving households in the dark. It has been a double whammy for industrial production, which has also been whacked by weakness in construction.

Industrial production in September was up only 3.1% from a year earlier, the lowest since March of last year, when the city of Wuhan was still under lockdown because of the pandemic.

“The power cuts are more concerning to some extent than the Evergrande crisis,” said Sara Hsu, a visiting fellow at Fudan University in Shanghai.

The Energy Bureau in Zhejiang province, a heavily industrialized region of coastal China, reduced power this autumn for eight energy-intensive industries that process raw materials into industrial materials like steel, cement and chemicals. Together, they consume nearly half the province’s electricity but account for only an eighth of its economic output.

Turning down the power to these industries risks creating shortages in industrial materials, which could ripple through supply chains.

Assembly plants in industries that use less electricity, like car manufacturing, have not faced the same demands for power cuts. But they face other challenges.

Ongoing coronavirus outbreaks in Southeast Asia have interrupted supplies of some auto parts. There is also a global shortfall of semiconductors, a critical component in cars.

Volkswagen, the market leader in China, said on Friday that its production and sales were falling in the country because of an ever worsening chip shortage and problems in Southeast Asia.

<h2>Finding Strength in Exports</h2>

For months, economists have made the same prediction: the fast growth of China’s exports cannot last.

The economists were wrong.

China’s exports kept surging through the third quarter and finished strong, up 28.1% in September compared with the same month last year. China posted its third-highest monthly trade surplus ever last month.

China has essentially maintained its strength in exports ever since its economy emerged from the pandemic in the spring of last year. As much of the world hunkered down at home, families splurged on consumer electronics, furniture, clothing and other goods that China manufactures in abundance.

The export boom, though, is creating another source of tension between the United States and China.

Katherine Tai, the U.S. trade representative, suggested in a speech two weeks ago that China’s export prowess was partly the result of subsidies and other unfair practices. “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said.

But Chinese officials and experts contend that the country’s success is the result of a strong work ethic and consistent, large investments in manufacturing. They are quick to point out that by bringing the pandemic firmly under control within several weeks early last year, China was able to reopen its factories and offices quickly.

“We have very strong supply, but weak demand,” said Tu Xinquan, the executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Technology in Beijing. “So companies have to export.”

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China.

Steel mills have faced power cuts. Computer chip shortages have slowed car production. Troubled property companies have purchased less construction material. Floods have disrupted business in north-central China. It has all taken a toll on China’s economy, an essential engine for global growth. The National Bureau of Statistics announced Monday that China’s economy increased by 4.9% in the third quarter, compared to the same period last year; the period was markedly slower than the 7.9% increase the country notched in the previous quarter. Industrial output, the mainstay of China’s growth, since the early days of the pandemic. Two bright spots prevented the economy from stalling. Exports remained strong. And families, particularly prosperous ones, resumed spending money on restaurant meals and other services in September, as China succeeded once again in quelling small outbreaks of the coronavirus. Retail sales were up 4.4% in September from a year ago. Chinese officials are showing signs of concern, although they have refrained from unleashing a big economic stimulus. Their own efforts, though, are part of the current economic challenges. “Though the government’s economic policies during the past months have some social benefits, they have also somewhat trimmed economic growth lately,” said George Yu, an economist at Renmin University in Beijing. In recent months, the government has unleashed a raft of measures to address income inequality and tame businesses, in part with the goal of protecting the health of the economy. But those efforts, including penalizing tech companies and discouraging real estate speculation, have also weighed on growth in the current quarter. The government had also imposed limits on energy use as a part of a broader response to climate change concerns. Now, the power shortages are hurting industry, and the country is rushing to burn more coal. “The economy is sluggish,” said Yang Qingjun, the owner of a corner grocery store in an aging industrial neighborhood of shoe factories in Dongguan, near Hong Kong. Power cuts have prompted nearby factories to reduce operations and eliminate overtime pay. Local workers are living more frugally. “Money is hard to earn,” Yang said. Trying to Solve the Real Estate Question Urbanization was once a great engine of growth for China. The country built spacious apartments in modern high-rises for hundreds of millions of people, with China producing as much steel and cement as the rest of the world output combined, if not more. Now, real estate — in particular, the debt that developers and homebuyers amassed — is a major threat to growth. The country’s biggest developer, China Evergrande Group, faces a serious cash shortage that is already rippling through the economy. Construction has ground to a halt at some of the company’s 800 projects as suppliers wait to be paid. Several smaller developers have had to scramble to meet bond payments. This could create a vicious cycle for the housing market. The worry is that developers may dump large numbers of unsold apartments on the market, keeping homebuyers away as they watch to see how far prices may fall. “Some developers have encountered certain difficulties, which may further affect the mood and confidence of buyers, causing everyone to postpone buying a house,” said Ning Zhang, a senior economist at UBS. The fate of Evergrande has broader import for the long-term health of the economy. Officials want to send a message that bond buyers and other investors should be more wary about lending money to debt-laden companies like Evergrande and that they should not assume that the government will always be there to bail them out. But the authorities also need to make sure that suppliers, builders, homebuyers and other groups are not badly burned financially. These groups “will get made more whole than the bondholders, that’s for sure,” predicted David Yu, a finance professor at the Shanghai campus of New York University. Addressing Difficulties in Heavy Industry As electricity shortages have spread across eastern China in recent weeks, regulators have cut power to energy-intensive operations like chemical factories and steel mills to avoid leaving households in the dark. It has been a double whammy for industrial production, which has also been whacked by weakness in construction. Industrial production in September was up only 3.1% from a year earlier, the lowest since March of last year, when the city of Wuhan was still under lockdown because of the pandemic. “The power cuts are more concerning to some extent than the Evergrande crisis,” said Sara Hsu, a visiting fellow at Fudan University in Shanghai. The Energy Bureau in Zhejiang province, a heavily industrialized region of coastal China, reduced power this autumn for eight energy-intensive industries that process raw materials into industrial materials like steel, cement and chemicals. Together, they consume nearly half the province’s electricity but account for only an eighth of its economic output. Turning down the power to these industries risks creating shortages in industrial materials, which could ripple through supply chains. Assembly plants in industries that use less electricity, like car manufacturing, have not faced the same demands for power cuts. But they face other challenges. Ongoing coronavirus outbreaks in Southeast Asia have interrupted supplies of some auto parts. There is also a global shortfall of semiconductors, a critical component in cars. Volkswagen, the market leader in China, said on Friday that its production and sales were falling in the country because of an ever worsening chip shortage and problems in Southeast Asia. Finding Strength in Exports For months, economists have made the same prediction: the fast growth of China’s exports cannot last. The economists were wrong. China’s exports kept surging through the third quarter and finished strong, up 28.1% in September compared with the same month last year. China posted its third-highest monthly trade surplus ever last month. China has essentially maintained its strength in exports ever since its economy emerged from the pandemic in the spring of last year. As much of the world hunkered down at home, families splurged on consumer electronics, furniture, clothing and other goods that China manufactures in abundance. The export boom, though, is creating another source of tension between the United States and China. Katherine Tai, the U.S. trade representative, suggested in a speech two weeks ago that China’s export prowess was partly the result of subsidies and other unfair practices. “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world,” she said. But Chinese officials and experts contend that the country’s success is the result of a strong work ethic and consistent, large investments in manufacturing. They are quick to point out that by bringing the pandemic firmly under control within several weeks early last year, China was able to reopen its factories and offices quickly. “We have very strong supply, but weak demand,” said Tu Xinquan, the executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Technology in Beijing. “So companies have to export.”

China’s economy continues to slow, rattled by real estate and energy

<a href="https://www.wionews.com/world/oil-prices-slip-for-second-day-on-global-growth-fears-228302">Oil prices fell on Wednesday on disappointing </a>economic data from China and a rise in US crude inventories, erasing some of the sharp gains in the previous session after the US said it would delay tariffs on some Chinese products, easing trade tensions.

<a href="https://www.wionews.com/business-economy/oil-inches-down-as-inventory-data-counters-trade-deal-hopes-228693">Brent crude was down 46 cents</a>, or 0.8 per cents, at $60.84 a barrel at 0639 GMT, after rising 4.7 per cents on Tuesday, the biggest percentage gain since December.

US oil was down 62 cents, or 1.1per cents, at $56.48 a barrel, having risen 4per cents the previous session, the most in just over a month.

China reported a raft of unexpectedly weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies.

"Deteriorating China industrial output and consumer spending suggest the fundamental picture isn't great and the demand for energy may be under the pressure," said Margaret Yang, market analyst at CMC Markets.

Profit-taking after Tuesday's sharp gains also weighed on crude prices on Wednesday, analysts said.

"The moves in oil were so outsized overnight, that some profit-taking in Asia was logical," said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

Benchmark crude prices surged on Tuesday after US&nbsp;President Donald Trump backed off his Sept. 1 deadline for 10per cents tariffs on some products affecting about half of the $300 billion target list of Chinese goods.

But with about $110 billion worth of Chinese imports still subject to the tariffs increase next month, the delay will not solve the core issues between the US and China, said Yang.

"Markets will perhaps soon come down to earth and face the reality of a world of elevated trade tariffs, slower growth and policy inconsistency," Yang said.

Markets have been pummelled in recent weeks amid tough talk from Trump on trade.

China's commerce ministry said in a statement on Tuesday that US and Chinese trade officials spoke on the phone and agreed to talk again within two weeks.

Data from industry group the American Petroleum Institute (API) showed US crude stocks unexpectedly rose last week.

Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said.

Oil prices fell on Wednesday on disappointing economic data from China and a rise in US crude inventories, erasing some of the sharp gains in the previous session after the US said it would delay tariffs on some Chinese products, easing trade tensions.

Oil prices fell on Wednesday on disappointing economic data from China and a rise in US crude inventories, erasing some of the sharp gains in the previous session after the US said it would delay tariffs on some Chinese products, easing trade tensions. Brent crude was down 46 cents, or 0.8 per cents, at $60.84 a barrel at 0639 GMT, after rising 4.7 per cents on Tuesday, the biggest percentage gain since December. US oil was down 62 cents, or 1.1per cents, at $56.48 a barrel, having risen 4per cents the previous session, the most in just over a month. China reported a raft of unexpectedly weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies. "Deteriorating China industrial output and consumer spending suggest the fundamental picture isn't great and the demand for energy may be under the pressure," said Margaret Yang, market analyst at CMC Markets. Profit-taking after Tuesday's sharp gains also weighed on crude prices on Wednesday, analysts said. "The moves in oil were so outsized overnight, that some profit-taking in Asia was logical," said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA. Benchmark crude prices surged on Tuesday after US President Donald Trump backed off his Sept. 1 deadline for 10per cents tariffs on some products affecting about half of the $300 billion target list of Chinese goods. But with about $110 billion worth of Chinese imports still subject to the tariffs increase next month, the delay will not solve the core issues between the US and China, said Yang. "Markets will perhaps soon come down to earth and face the reality of a world of elevated trade tariffs, slower growth and policy inconsistency," Yang said. Markets have been pummelled in recent weeks amid tough talk from Trump on trade. China's commerce ministry said in a statement on Tuesday that US and Chinese trade officials spoke on the phone and agreed to talk again within two weeks. Data from industry group the American Petroleum Institute (API) showed US crude stocks unexpectedly rose last week. Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said.

Oil prices fall as China economic data disappoints, US inventories gain

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