Chinese economic growth rate to slump below 5 per cent

Grim days are ahead for the Chinese economy as the growth rate is to slump below 5 per cent following the property crisis, industrial slump, weak consumption and the fallout from COVID-19-led lockdowns.

Think tank China Finance 40 Forum, which has the deputy governor of People's Bank of China (PBOC) as a member, has expressed concerns over growth rate remaining below 5 per cent in case domestic demand fails to improve, reported The Singapore Post.

Moreover, with the outbreak of the Omicron variant of coronavirus and possible blacklisting of Chinese companies by the US, GDP growth in 2022 is likely to slump.

Global financial services group Nomura has cut economic growth for China in 2022 sharply- 2.9 per cent in the first quarter and 3.8 per cent in the second quarter, reported The Singapore Post.

Rob Subbaraman, Nomura's chief economist, said China's GDP growth will slow down to 4.3 per cent from 7.1 per cent in 2021.

China's economy had paced at 18.3 per cent in the first quarter of 2021. However, the economic growth will be restricted to 5.3 per cent in 2022, predicted Barclays plc citing power and property crisis.

Asian Development Bank too expects slower growth for China- at 5.3 per cent, reported The Singapore Post.

Amid the unprecedented power crisis, China saw China's second-biggest property developer, Evergrande, stuck in debt of USD 300 billion. Evergrande's stocks plummeted by nearly 90 per cent since July 2020.

The real estate bust is going to spell trouble for China's economy as the housing activity accounts for 29 per cent of GDP.

Yan Yuejin, Director of E-house China Research and Development Institution, said "Cities of all classes are under pressure. The current scale of market supply is large and demand is weak."

Even retail sales in China is on the decline. In November it dropped to 3.9 per cent as compared to 4.6 per cent in the corresponding month last year. Online sales of physical goods and auto sales too have gone downward, reported The Singapore Post.

"Headwinds and uncertainties are clouding the recovery pace of China's economy," said Bruce Pang, head of macro and strategy research at China Renaissance.

Moreover, there are reports that Chinese companies listed on Wall Street will not be removed from the US exchanges in the next three years. US government is set to blacklist eight big Chinese companies for their alleged involvement in the surveillance of Uyghur Muslims, reported The Singapore Post.

The investment and export sanctions on these companies have caused stocks of Chinese healthcare and technology to tumble as many more companies from China are expected to be blacklisted.

( With inputs from ANI )

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