China’s regional economies echo national slowdown in face of ‘grim, complex’ outlook, coronavirus outbreaks

All 31 provincial-level jurisdictions followed the national trend after China’s overall economic growth slowed to 4.9 per cent in the third quarter
A total of 20 of China’s provinces failed to achieve the national average of a 9.8 per cent growth rate in the January-September period

China GDP

Orange Wang

Published: 5:31pm, 2 Nov 2021

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Sporadic coronavirus outbreaks and a “grim and complex” external environment continued to weigh on China’s regional economic growth rates during the first three quarters of the year with almost two thirds falling below the national average.

A total of 20 of China’s 31 provincial-level jurisdictions failed to achieve the national average of a 9.8 per cent growth rate in the January-September period. This is the same ratio as seen in the first half of 2021, but double the level seen at the end of last year.

The regional slowdown echoes the national trend after China’s overall economic growth slowed to 4.9 per cent in the third quarter.

The autonomous region of Tibet was the last to confirm its growth figure on Monday, with its economy growing by 7.2 per cent from a year ago in the first three quarters of 2021, adding to the list of provinces to fall below the national average.

The economic growth rate of most provinces has not returned to the pre-pandemic level … the re-emerged [coronavirus] outbreaks this year have caused a certain impact

Liang Jing

Regional disparities also remained as coastal export hubs continued to surge ahead due to surprisingly strong exports, while Western areas are now struggling, posing a challenge for Beijing’s efforts to build a new pole of growth as the country is trying to shift to an economy based on spending by its 1.4 billion consumers.

“The economic growth rate of most provinces has not returned to the pre-pandemic level … the re-emerged [coronavirus] outbreaks this year have caused a certain impact,” Bank of China analyst Liang Jing said last week.

In terms of the two-year average growth rate – a measurement used by China’s statistics bureau to reduce the distortion caused by the coronavirus – 27 provinces have registered a lower expansion pace compared with the same period in 2019.

Guangdong, the southern Chinese manufacturing and trade hub, remains the largest economy in the country after the province’s economy grew by 9.7 per cent from a year earlier to 8.8 trillion yuan (US$1.4 trillion) in the first nine months of the year.

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This was, though, slightly lower than the national average and down from the 13.0 per cent growth rate seen in the first two quarters of the year.

“Guangdong’s economy continued to recover steadily in the first three quarters, but it should also be noted that the external environment is still grim and complex, the problem of uneven economic recovery has further emerged, and the overall recovery momentum has slowed down,” the local authority said at the end of last month.

The eastern province of Jiangsu rose by 10.2 per cent to 8.5 trillion in the first three quarters of the year making it the second largest economy behind Guangdong, with its year-on-year absolute gain of 1.1 trillion the highest in the country.

“The regions having better [industrial] transformation perform prominently in the economy … the hi-tech sectors of Jiangsu and Zhejiang have developed rapidly,” Liang added.

“Consumption and investment in the eastern and central regions is generally better than that of the Western regions.”

Hubei recorded the highest growth rate at 18.7 per cent, although the increase could be partly explained by a relatively low base last year in the central province where the coronavirus was first detected.

A year ago, Western provinces including Guizhou were playing a leading role in bolstering China’s growth rate as the inland regions were less affected by the pandemic.

But this year, economies in Western China have generally lost steam, and during the first three quarters only Chongqing of the 12 Western provincial-level regions beat the national average in terms of growth rate.

Western regions, including Ningxia, Gansu, Inner Mongolia and Yunan, have suffered the most due to the recent wave of Delta variant outbreaks.

Due to the grim and complex international situation, the frequent occurrence of sporadic domestic Covid-19 outbreaks this year and the high base in the same period last year, the growth rate of the province’s main economic indicators has kept slowing down quarter-by-quarter

Peng Long

Guizhou grew by 8.7 per cent in the first three quarters of the year, sharply slowing down from a growth of 12.1 per cent in the first half of the year.

“Due to the grim and complex international situation, the frequent occurrence of sporadic domestic Covid-19 outbreaks this year and the high base in the same period last year, the growth rate of the province’s main economic indicators has kept slowing down quarter-by-quarter,” said Guizhou provincial statistics bureau spokesman Peng Long last month.

The Western province used to be considered a backwater in the Chinese economy, but has been able to achieve accelerated growth in recent years by leveraging construction and infrastructure investment.

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However, Beijing has strengthened its push to rein in mounting local government debt and excessive borrowing in the property sector, with Guizhou’s fixed-asset investment shrinking by 9.4 per cent from a year earlier in the January-September period.

The contraction was also seen in the northwestern province of Shaanxi as its fixed-asset investment declined by 3.1 per cent in the first three quarters of the year compared to the same period last year.

“[The Shaanxi economy] is facing the challenge of increasing downward pressure,” said Hu Qingsheng, a spokesman for the provincial statistics bureau last month, citing the impact of rising raw material prices, weakening investment levels and stricter coronavirus control measures.

This article appeared in the South China Morning Post print edition as: regions echo national slowdown