China to release GDP data for the third quarter 2021

China will release GDP data for the third quarter of 2021 today.

A Bloomberg survey of economists predicts a median estimate of 1.1% growth while global broker Market Securities predicts only 0.3% growth. Slower property construction and retail sales in August followed restrictions to curb rising COVID-19 infections in July, all of which slowed GDP growth.

The low estimates reflect China’s visible economic stress and slowdown, only partially due to the pandemic. A telling sign is the likely default of real estate and investment giant Evergrande on its $300 billion debt, heralding the possibility of a property bubble-burst and credit crunch. The slowdown has also affected the wider economy, including reducing commodities demand.

Expect official GDP growth of around 5%, although the reality is likely closer to the 1.1% estimate. China’s struggles signal continued complications for the global economic recovery and also expose the weaknesses of China’s state-run capitalism. For example, Beijing’s decision not to bailout Evergrande means post-pandemic China will not be able to support rapid property development booms and therefore will struggle to grow at its previously expeditious pace. Likewise, Beijing increasingly policing its largest corporations means it likely will not tolerate unsustainable debt loads or overleveraging anymore either.

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