Property, Covid-19 challenges to remain with China’s economic slowdown to continue in 2022

China’s economy grew by 4.9 per cent in the third quarter of 2021 compared with a year earlier, down from the 7.9 per cent growth seen in the second quarter

Fitch Ratings has cut its forecast for China’s growth in 2021 to 8.1 per cent, while the US ratings agency has also lowered its 2022 GDP growth forecast to 5.2 per cent

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Amanda Leein BeijingandFrank Tangin Beijing

Published: 6:30pm, 18 Nov 2021

China’s economic growth is likely to deteriorate further next year as rising risks of a fallout from the property market and Beijing’s zero tolerance approach to the coronavirus could weigh on conditions in the coming months, analysts said.

Recent outbreaks of the Delta variant have prompted travel restrictions and lockdowns in some cities in China, damping economic activities, while Beijing’s tough stance to deleverage the property sector, which contributes 14 per cent to China’s gross domestic product (GDP), will further slow growth in the coming months, according to Andrew Fennell, a senior director at Fitch Ratings.

“Many countries have started to treat Covid-19 as an endemic disease, while China continues to eliminate the virus, there will be more challenges in the future [for the economy],” said Fennell on Thursday.

China’s economy grew by 4.9 per cent in the third quarter of 2021 compared with a year earlier, down from the 7.9 per cent growth seen in the second quarter.

We think Beijing will hit a pause to balance growth and debt management … and we expect more pro-growth policies in 2022

Robin Xing

Fitch has already cut its forecast for China’s growth in 2021 to 8.1 per cent from 8.4 per cent, while the US ratings agency has also lowered its 2022 GDP growth forecast to 5.2 per cent from 5.5 per cent.