The world's second largest economy, China, grew by 8.11TP2Q, 2021, but experienced a sharp slowdown in the second half of the year, reflecting a campaign launched to reduce leverage levels in the real estate sector.  

In the last quarter of 2021, the year-on-year growth rate of the world's second largest economy slowed to 4%, down from the 4.9% growth achieved in the July-September quarter and the 18.3% pace recorded in the first three months of 2021.

The Lusa information agency, citing analysts, says that the slowdown will persist this year due to new outbreaks of covid-19 and efforts to reduce debt in the real estate sector.

This slowdown could have global repercussions by reducing Chinese demand for steel, consumer goods and other imports.

China is known to have been the first major world economy to recover from the covid-19 pandemic, but activity slowed after Beijing restricted access to credit in the real estate sector.

Real estate is the favorite investment vehicle for Chinese households, making up about 30% of Chinese GDP.

This has fueled consumer nervousness about spending and anxiety in the financial market about possible defaults among the country's construction companies.

"The pressure on growth will persist, going into 2022," predicted Tommy Wu of the Oxford Economics consultancy, in a report.

According to Tommy Wu the Chinese government will probably throw "political support" to keep annual growth above 5%.

Domestic consumption growth, the biggest driver of the economy, fell to just 0.2% in December from 3.9% in the previous month.

The rise in investment in plant, property and other fixed assets slowed to 1.71TP2Q, below the 4.91TP2Q level for the year as a whole, as companies cancelled or postponed construction plans.

Source Lusa