(Reuters) - China’s economy grew at the slowest pace in a year in the third quarter, hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks and raising heat on policymakers amid rising jitters over the property sector. Data released on Monday showed gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ KEY POINTS * Q3 GDP +4.9% y/y (f’cast +5.2%, Q2 +7.9%) * Q3 GDP +0.2% q/q s/adj (f’cast +0.5%, Q2 +1.2% revised) * September industrial output +3.1% y/y (f’cast +4.5%, Aug +5.3%) * September retail sales +4.4% y/y (f’cast +3.3%, Aug +2.5%) * Jan-Sept fixed asset investment +7.3% y/y (f’cast +7.9%, Jan-Aug +8.9%) MARKET REACTION Stock markets showed little reaction to the broadly weaker China data, which had largely been expected. [.SS] COMMENTARY: SELENA LING, CHIEF ECONOMIST, OCBC BANK, SINGAPORE “Headwinds are on the production side, especially with the current power crunch, increasing regulatory scrutiny and also the downside risks to the property market. “2022 growth is likely to slow further, closer to a low 5% handle... it’s back to a domestic demand story (and) retail sales is a bright spot. The probability of an imminent RRR cut has diminished post-PBOC conference and the full MLF rollover last week.” IRIS PANG, CHIEF ECONOMIST, GREATER CHINA, HONG KONG “It’s within my expectations, but the direction is almost all down. “Retail sales figures show there is still huge demand for jewellery, which makes me think that people are not willing to buy properties and are trying to find alternatives. “Automobile sales are in contraction - this also reflects that the economy is not really solid, if people don’t want to buy big-ticket items. Another thing that I usually use to gauge the average consumer is clothing, and clothing is under contraction ... and this makes me think the average consumer is now saving more than spending. “Most of the (negative) factors are policy-driven... the economy is having a lot of pain points and these pain points are not going away soon because policies are here to stay, and therefore it will continue into 2022 -- unless international borders fully reopen, that will give a new engine for all economies.” ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG “Q3 data showed further signs that the risk of stagflation is rising. GDP growth year-on-year dropped below 5%. The quarter-on-quarter growth dropped to 0.2%. The QoQ growth is at the slowest level except for Q1 last year when COVID broke out. “Yet the unemployment rate declined, which is puzzling. This suggests the government may not feel the urgency to launch stimulus and boost growth. The PBoC press conference last week also sent signals indicating that the monetary policy stance will not change significantly. Without a meaningful policy change, growth in Q4 would likely slow further.” KEN CHEUNG, CHIEF ASIAN FX STRATEGIST, MIZUHO BANK, HONG KONG “On the monetary policy front, the PBOC downplayed the easing bias and is more likely to implement targeted easing measures to replace the broad RRR cut in Q4. Yet, the increasing downside risk for China growth in Q4 should still dent RMB sentiment and we expect the CNY to fall back to 6.50 at year-end.” LOUIS KUIJS, HEAD OF ASIA ECONOMICS, OXFORD ECONOMICS, HONG KONG “We think the electricity shortages and production cuts will become less of a problem later in Q4. In line with our expectation, senior policymakers have started to stress growth and we expect them to start calling for the pursuit of climate targets on a more measured timeline. “But, while we don’t expect Evergrande’s problems to trigger a Lehman moment, we think the pending real estate downturn will continue to weigh substantially on growth in the coming months, while lingering COVID caution should continue to lead to be a drag on consumption. As a result, we forecast only 3.6% y/y GDP growth in Q4. “In response to the ugly growth numbers we expect in the coming months, we think policymakers will take more steps to shore up growth, including ensuring ample liquidity in the interbank market, accelerating infrastructure development and relaxing some aspects of overall credit and real estate policies.” BACKGROUND: * China’s economy has rebounded from the pandemic but the recovery is losing steam, weighed by faltering factory activity, persistently soft consumption and a slowing property sector. * Signs of further slowing in the economy put pressure on the central bank to ease policy, but analysts said concerns over debt and property bubble risks may delay any meaningful steps. * Global worries about a possible spillover of credit risk from China’s property sector into the broader economy have intensified as major developer China Evergrande Group wrestles with more than $300 billion of debt. * Chinese Premier Li Keqiang has said China has ample tools to cope with economic challenges despite slowing growth, and the government is confident of achieving full-year development goals. * China’s economy is “doing well”, but faces challenges such as default risks for certain firms due to “mismanagement”, the People’s Bank of China Governor Yi Gang said on Sunday. * The country’s export growth surprisingly accelerated in September as still solid global demand offset some of the pressures on the economy. * Economists expect China’s GDP to grow 8.2% this year. This is slower than an 8.6% rise forecast in a July poll, but would still be the highest annual growth in a decade. The economy expanded 2.3% in pandemic-hit 2020. * China has set an annual GDP growth target at above 6% this year, below analysts’ expectations, giving policymakers more room to cope with uncertainties. Reporting by Asian bureaus; Editing by Subhranshu Sahu Our Standards: The Thomson Reuters Trust Principles.