China’s economy is facing challenges. Recently, many industries in major provinces have been impacted by power rationing and enforced cuts in a drive to meet targets for reducing energy and emission intensity.1 And this could last for some time, placing further pressure on the supply side of the economy which is already showing signs of a slowdown.
Meanwhile, the demand side of China’s economy is weakening. The y-o-y growth in China’s retail sales fell to 2.5% in August, a sharp drop from previous months. Growth in real estate investment, sales and new constructions are also rapidly trending down. This could be due to a combination of the Delta variant’s resurgence and tighter regulations in the property market.2