Rosalind Evans
China’s Property Market Faces Continued Uncertainty
According to Standard Chartered CEO Bill Winters, China’s property market has not yet hit rock bottom despite a tumultuous year. In a recent interview with CNBC’s JP Ong, Winters described the investing climate in China as “difficult,” highlighting the persistent lack of consumer and international investor confidence.
“We know that the underlying source of a lot of the confidence questions is the property market, and the property market has not yet completely bottomed out, so it’s been a slow grind down,” Winters explained. This ongoing instability in the property sector is contributing to broader economic concerns.
Economic Challenges and Forecast Adjustments
The economic outlook for China remains challenging. The country’s GDP growth slowed to 4.7% in the second quarter, a decline from 5.3% in the first quarter and the lowest since early 2023. Reflecting this cautious economic environment, Bank of America has revised its GDP growth forecast for China to 4.8% for 2024 from an earlier estimate of 5%. The forecast for 2025 and 2026 has also been trimmed to 4.5%, down from 4.7%.
Beijing has implemented several measures to stimulate the economy, including cutting loan rates and allowing homebuyers to refinance their home loans. However, Winters noted that China has not launched a major stimulus program because it wants to avoid the high debt levels seen in other countries during the first wave of COVID-19.
Ongoing Stimulus Measures and Future Expectations
Winters elaborated, “I think we’re seeing these continuous, small stimulus programs, monetary and fiscal policy, driven to make sure that we don’t get into a bad spiral that would be difficult to recover from… We expect that the stimulus will be enough, but not excessive.” He believes that while the short-term situation may be uncomfortable, fiscal prudence will ultimately benefit China in the long run.
In contrast, Hao Hong, partner and chief economist at GROW Investment Group, remarked that there are no signs of solid policy stimulus yet. He suggested that China may withhold major stimulus due to structural and cyclical factors. “We can only guess” why Beijing has not enacted significant measures, Hong said.
Cautious Optimism Amid Uncertainty
As China navigates these economic challenges, the property market’s slow recovery and the cautious approach to fiscal stimulus reflect broader concerns about economic stability. While Winters and Hong offer different perspectives, both highlight the ongoing uncertainty and the complex balancing act China faces in its economic management.
