The Chinese government's intervention in key sectors of the Chinese economy led to a slower growth rate in the third quarter. Released figures showed GDP growth of 4.9% lower than 7.9% in the second quarter.
During the third quarter, power shortages added to the problems of the Chinese economy, which led to the freezing of production, but efforts to solve these problems by reopening the lignite plants, have begun to smooth out any turmoil. This development is expected to improve the financial conditions of the fourth quarter.
Looking at the overall picture of the economy in China, it is immediately clear that there is currently a complete disconnection from the other developed economies. Industrial production has to bear the burden of high energy costs, shortages of raw materials as well as lack of investments. Retail sales are falling sharply as factory shutdowns lead to rising unemployment and consumption is hit hard.
Diesel prices at three- year high
Chinese economy will have to work hard to get as far as possible out of the domino effect of energy price hikes. Having already altered downwards the goals of energy dependence in order to be able to supply the system with energy, diesel prices have been found at the highest levels of the last three years. This is expected to lead to an increase in inflation but also to a possible decrease in the growth rate.
Hope can derive only from infrastructure projects
With venture capital being “held hostage” by the Chinese authorities, it is clear that there is no willingness for investments. Therefore, as analysts note, the course of the Chinese economy in the coming period will be determined almost exclusively by government investment in infrastructure improvement.
The transport network as well as the telecommunications networks are the ones that gain the lion's share of Chinese state capital and relevant investments have increased by 26.7% and 24.4%, respectively.