New figures released by China's National Bureau of Statistics report GDP growth of just 0.2% in Q3 (July to September) – the weakest quarterly growth since records began in China.
For the year to date, China's growth is a fair 4.9%; good for most countries but down sharply from 7.9% GDP growth in Q2 (April to June) and below the expected decrease. Industrial production was up year-on-year for September by 3.1%, but a mere 0.1% of that came this September – indicative of a present-day slowdown for China's economy.
At the heart of the issue is a power shortage; an inhibiting factor being felt around the world. China has had to renege on its green energy pursuit in the short-term to keep the lights on, switching back to coal at a rapid pace to keep the nation powered following a spate of blackouts.
One side effect of the energy problems being seen in China is a sharp price rise for zinc, which hit a 14-year high on the Shanghai exchange. Key materials and resources have all seen prices inflate due to greater demand than the ability to supply, but zinc jumped up by 8% – the highest level since August 2007 on the Shanghai Futures Exhange.
This inflation will further contribute to industrial slowdown, with many national industries choosing to slowdown production to save costs in the short-term and ride out the inflation, thus lowering productivity, output, and GDP. The alternative is to pass the new manufacturing costs onto consumers, which is inevitably unpopular amongst the public but in some cases a necessity.
While energy is an ongoing pain for China, the next big concern is the re-emergence of Evergrande and their debts, with the 30-day grace period on the company's first – and missed – debt repayment due this week. Failure to pay at least something this time could finally have a knock-on effect onto the Asian markets, so keep an eye out for any drama later this week.