Nov 15, 2021 03:17 PM

China Economy Stabilizes as Spending, Power Supply Picks Up

Shoppers walk around a mall in Beijing on Aug. 25. Photo: Bloomberg
Shoppers walk around a mall in Beijing on Aug. 25. Photo: Bloomberg

(Bloomberg) — China’s economy performed better than expected in October as retail sales climbed and energy shortages eased, partly offsetting a slump in property.

Industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts. Growth in fixed-asset investment eased to 6.1% in the first 10 months of the year, compared with a forecast of 6.2%. The surveyed jobless rate was steady at 4.9%.


The better-than-expected numbers will come as a relief after the economy’s momentum weakened in the second half of the year, with both demand and supply coming under pressure. Beijing’s crackdown on the property market has slowed lending to a sector that accounts for as much as 25% of GDP, while energy shortages have caused factories to curb production.

“The national economy was generally stable and maintained the trend of recovery,” the NBS said in a statement. “However, we must be aware that the international environment is still complicated and severe with many unstable and uncertain factors.”

Electricity shortages, which had been a key constraint on industrial output in September, eased last month, with power supply climbing 11.1% in October from a year earlier. The property slump continued to weigh on output though, with production of construction-related commodities, such as steel and iron, contracting.

Separate data from the NBS showed home prices fell 0.25% in October from the previous month, a bigger decline than in September.

“Overall there is some improvement, especially in the mining and utility industries,” said Lu Ting, chief China economist for Nomura Holdings Inc. “But other areas actually didn’t improve substantially and remain at low levels, especially for investments.” Rising prices and consumers panic-buying goods at the beginning of October may have contributed to the pickup in spending, he said.

Retail spending benefited from pre-sales ahead of the Double 11 shopping festival, while the National Holiday in October helped to drive a recovery in catering and accommodation sales, Fu Linghui, a spokesman of the NBS, said at the briefing.

The slowdown has put the spotlight back on policymakers, who have so far taken a muted approach to stimulus, preferring to “fine-tune” policies rather than flood the economy with support.

In line with that approach, the People’s Bank of China refrained from injecting additional cash into the financial system in its monthly liquidity operation on Monday, rolling over all the loans maturing instead.

“China’s stronger-than-expected October activity offers some assurance the economy is not sliding deeper into a rut, though there’s no sign it’s set for a turnaround. An extra working day in the month was one reason for the better picture. Even accounting for that, output appeared to stabilize” said Chang Shu, Bloomberg’s chief Asia economist.

Most economists expect Beijing to stick with the property curbs, resulting in weaker growth into next year. GDP growth is expected to slow to 3.5% in the final quarter, reach 8% for the full year and weaken to 5.4% in 2022, according to a Bloomberg survey of economists.

“Growth will likely weaken in the rest of this year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd. “The slowdown in the property sector continued, which is the key risk for the macro outlook in the next few quarters.”

Contact editor Michael Bellart (

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