Goldman Sachs slashed its forecast for growth in China’s economy to 5.7 percent this year after a series of power blackouts, heaping pressure on Beijing as it grapples with global market turbulence and a slowing stock market.
“The timing of the early spring power outages in China — all of which occurred in March, giving policymakers little time to react — look like part of a mismanaged and poorly coordinated effort to motivate state energy companies to speed the pace of upgrades and run through reserves,” Goldman Sachs analysts Kevin Lai and Christian Zhang wrote in a research note.
The power outages took place from mid-February to the middle of March, with widespread blackouts since then affecting at least 10 percent of consumers, said Li Wei, senior analyst at Peking First Advisory. The blackouts are the latest in a string of major challenges facing the world’s second-largest economy.
In February, growth in factory output and retail sales slowed in January. The country’s stock market had its worst start to a year in history in February and Chinese policy makers have sought to reduce leverage while grappling with trade tensions and market volatility.