Elon Musk says China is in ‘recession of sorts’. His explanation

Elon Musk On China's Economy: “China is experiencing a recession of sorts” mostly in the property market, said Elon Musk.

China is experiencing a downturn similar to a recession driven by the housing market slump that has lasted for over a year, according to Tesla Inc.’s founder Elon Musk.

Elon Musk On China's Economy: Tesla and SpaceX CEO Elon Musk  (AP )

“China is experiencing a recession of sorts” mostly in the property market, said Musk, the electric carmaker’s chief executive officer, during a third-quarter earnings call Wednesday US time. He was responding to a question about recent order intake trends, particularly in China, where Tesla has a major factory.

Europe, meanwhile, is facing a recession driven by energy shortages, while the US is in good shape, Musk said, adding that while the Federal Reserve is raising interest rates “more than they should,” he thinks they’ll “eventually realize that” and bring them back down again.

China’s economy almost stagnated in the second quarter as major cities were put under lockdown, including Shanghai. During that city’s months-long lockdown, factories -- including the Tesla plant -- were forced to suspend operations for several weeks.

Since then, China’s recovery has remained fragile as Covid outbreaks and restrictions keep weighing on activity and demand. The nation’s property market slump has also dampened confidence and curbed demand for everything from commodities to loans.

Economists surveyed by Bloomberg forecast the economy to have recorded 3.3% growth in the third quarter. That data was due Tuesday, but the country’s statistics authority postponed its release -- an unusual move that came as the Communist Party’s twice-a-decade congress convenes.

Property investment through the first nine months of the year is estimated to have declined 7.5% from a year ago. Growth through a similar time period before the pandemic had surpassed 10%.