In the first 8 months of the year, profits of industries in China rose by 49.5%, but there is little to be happy: the central bank injects another 15.48 billion dollars of liquidity in support of credit in view of the probable maxi-default of the real estate developer Evergrande burdened with 300 billion in debts. Above all, the cuts in the supply of energy are frightening, which risk affecting the production chain and the supply chain at the end of the year, the most complicated for the business world.
The determining factor of energy
The energy crisis, caused by environmental controls, supply constraints and soaring prices, has forced industries across the country to cut production and left several provinces struggling to guarantee residents electricity and heating. The Chinese economy is already grappling with problems in the real estate and technology sectors and concerns about the future of indebted real estate giant China Evergrande. The fourth quarter, therefore, turns out to be fraught with uncertainty.
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The Central Bank also downgraded its valuation relative to China’s growth prospects by paying more attention to keeping growth stable in credit expansion and its effectiveness in supporting the real economy.
Goldman Sachs’ prophecy
Downward estimates on Chinese growth expected in 2021 begin to circulate.
Goldman Sachs specifically said in a statement that it has lowered its 2021 growth forecast for China to 7.8% from 8.2%, as energy shortages and deep cuts in industrial production add “significant downward pressures “.