[Economics] Barclays: Energy restrictions may reduce China's economic growth to 6%

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https://www.alarabiya.net/aswaq/economy/2021/10/08/باركليز-قيود-الطاقة-قد-تخفض-نمو-اقتصاد-الصين-الى-6٪

 

 

 

China's goals to reduce its economy's dependence on energy indicate that energy rationing will continue over the next year and, if strictly enforced, could reduce the country's economic growth through 2021 to a level well below expectations of 6%, according to Barclays.

"The Chinese government faces a difficult choice between a more significant economic slowdown and easing its dual targets for total energy use," Barclays economists led by Jian Zhang said in a report.

 

This is while most economists had expected that the gross domestic product of the second economy in the world would expand by about 8% this year.

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China's economyThe energy crisis in China is putting the global economy on high alert
China has set a nationwide goal of "reducing the energy intensity of its economy," the amount of energy used per unit of gross domestic product, by 3 percent this year, as it seeks to reduce pollution.

 

Beijing warned in August that most provinces were not on track to meet the target, prompting some to cut energy use in energy-intensive sectors such as aluminum and steel production.

Economists at Barclays said that Beijing has set a target for energy production growth of 2.9% for 2021, implying a similar target for growth in energy consumption. They added that energy consumption growth so far this year exceeds 4%, which means full-year economic growth could slow to 6% if the energy consumption target is strictly enforced.

 

They noted that constraints on energy use in the most consumption-intensive sectors are likely to persist through the first quarter of 2022. But Beijing is likely to adopt "a more flexible approach to achieving its goals rather than incurring a sharp slowdown in growth," according to the report. .

However, they said that even with a moderate application scenario, growth could drop by 1% to 3% in the next two quarters.