China experiences economic growth drop as construction slows

China has witnessed a fall in the growth rate of its economy after construction in the country slowed due to the effects of the coronavirus pandemic

A slowdown in construction in China has seen the nation’s economic growth rate drop from 7.9% in the previous quarter to 4.9% in the latest quarter of this year. The coronavirus pandemic also reportedly played a role in weakening the country’s economy. 

Government data showed that factory output, retail sales, and investment in the construction industry were all less than that of the previous quarter. Louis Kuijis from the research company Oxford Economics predicts the situation will likely not improve. “Growth will slow further,” he said. He also said that “ugly growth numbers” in the future may prompt Beijing to ease lending controls and encourage infrastructure development to “prop-up activity”.

Manufacturing industry also affected, with construction output growth rate becoming the worst in the past decade 

 

As well as the construction industry, the manufacturing industry has also been negatively impacted due to shortages in processor chips and other components caused by the coronavirus pandemic. Construction output in China during the period from July to September remained relatively unchanged, growing by just 0.2%. By comparison, construction output from April to June grew by 1.2%. The latest output growth rate of 0.2% makes it one of the weakest quarters for the construction industry in China in the past decade.

Other factors affecting the construction industry in China 

 

Another factor affecting the slowdown of the construction industry is tighter controls imposed by regulators last year over borrowing by developers. For example, one of the biggest companies affected, Evergrande Group, is currently struggling to avoid defaulting on billions of US dollars owed to bondholders.

Commenting on China’s economy in a report, Rajiv Biswas of IHS Markit, said: “The near-term outlook for China’s economy in Q4 remains difficult, due to the expected impact of continuing power shortages going into the winter season and a continuing slowdown in the property sector. The real estate sector continues to be hit by uncertainties relating to the Evergrande debt problems and fears of contagion to some other property developers.”

 

Share

Featured Articles

ROSHN Helping Build new Future for Saudi Arabia

Saudi community developer ROSHN on why it is is building a number of ultra-luxury housing projects along the shores of the Red Sea

Danish Hydraulics Specialist Danfoss 'Growing Sustainably'

As Danish industrial hydraulics multinational Danfoss releases its annual report for 2023, we profile the company whose technology construction relies on

Volvo CE: the Sustainable Construction Equipment Specialist

We profile Volvo Construction Equipment, which produces excavators, loaders, dump trucks & compactors to meet environmental and operational needs

Cement Industry key Target of $20bn US Decarbonisation Plan

Sustainability & Green Building

Skanska Reshapes its Sustainability Team

Sustainability & Green Building

Kingspan Group 'Cuts GHG Emissions by 65%'

Built Environment