China GDP Disappoints as Third-Quarter Growth Slows to 4.9%

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China economy recovery

China’s third-quarter GDP grew a disappointing 4.9% as industrial activity rose less than expected in September.

The National Bureau of Statistics said Monday that gross domestic product grew 4.9% in the third quarter from a year ago. That missed expectations for a 5.2% expansion, according to analysts polled by Reuters.

Industrial production rose by 3.1% in September, below the 4.5% expected by Reuters.

“Since entering the third quarter, domestic and overseas risks and challenges have increased,” Fu Linghui, spokesperson for the National Bureau of Statistics, said at a press conference Monday.

The power shortage had a “certain impact” on normal production, Fu said, but he added that the economic impact “is controllable.”

Many factories had to stop production in late September as a surge in the price of coal and a shortage of electricity prompted local authorities to abruptly cut off power. The central government has since emphasized it will boost coal supply and ensure the availability of electricity.

Monday’s data release also showed businesses were less keen to put money into future projects.

Fixed asset investment for the first three quarters of the year came in weaker than expected, data from the National Bureau of Statistics showed. It was up 7.3% from a year ago compared to the expected 7.9% figure.

“Investment activities have been subdued as a result of the tight credit conditions,” said Chaoping Zhu, global market strategist at J.P. Morgan Asset Management.

Zhu estimated that fixed asset investment declined by 2.5% in September from a year ago, primarily dragged down by a 3.5% drop in real estate investment.

Real estate and related industries account for about a quarter of China’s GDP, according to Moody’s estimates. In the last 18 months, Beijing has increased its efforts to reduce developers’ reliance on debt.

The struggles of giant developer Evergrande came to the forefront in August, when the company warned of default and subsequently missed payments to investors in its offshore U.S. dollar-denominated debt.

China’s central bank said Friday that Evergrande is a unique case and that most developers had stable operations.

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