What’s Going On Here?Data out on Monday showed that China’s economy grew at its slowest pace in a year last quarter, as last year’s teacher’s pet suddenly falls out of favor. What Does This Mean?China might’ve outperformed the rest of the world last year, but this year has brought a whole host of challenges for its economy. Energy shortages, for one, have led to surging prices and power rationing, which has pushed factories to cut production and led to a drop in manufacturing activity. The government’s much-discussed crackdown on the real estate market, meanwhile, has really slowed the property sector down – no small thing considering property-related activities make up nearly a third of the Chinese economy.
All that might be why the country’s economy grew just 4.9% last quarter compared to last year – well below the 7.9% of the quarter before. Investment banks, for their part, saw it coming: data out last week showed that 10 of the 13 major banks have been cutting their full-year growth forecasts for China since August. Why Should I Care?Zooming in: Don’t expect a helping hand.
Things aren’t all bad: China’s exports grew 28% last month compared to the year before, while consumer spending grew by a better-than-expected 4.4%. The government might be holding out hope that this will be enough to keep its recovery on track for now, which could explain why it isn’t rushing to bring in any financial support programs.
The bigger picture: EMs break with tradition.
China’s fellow emerging markets (EMs) aren’t doing much better: Bank of America is forecasting that the group of them (excluding China) won’t grow as quickly as the US next year – the third year in a row that’s happened (tweet this). This wasn’t the plan: EMs – which have a lot of scope to come on in leaps and bounds using advancements from around the world – traditionally grow faster and offer higher potential returns than more developed markets. | 
