China property-market pessimists are overlooking the underlying demand, as evidenced by strong sales by state-backed property developers and rising rents, according to veteran economist Hong Hao of Grow Investment Group.
China's economy is facing a downward spiral due to a crisis in the debt-laden property sector, prompting seven city banks to reduce their growth forecasts for the country; concerns include falling into deflation, high unemployment rates, and the need for more proactive government support.
China's economic slump is worsening due to the prolonged property crisis, with missed payments on investment products by a major trust company and a fall in home prices adding to concerns.
China's economy has slipped into deflation for the first time in two years, raising concerns about its post-pandemic recovery and drawing comparisons to Japan's struggles with stagnant growth and deflation in the 1990s, as China faces challenges in its property sector and a need to shift towards consumer spending.
China's property crisis raises concerns about a potential "Lehman Moment" and investors are eagerly waiting to see how Beijing will handle the mounting problems.
China's economic challenges, including deflationary pressures and a slowdown in various sectors such as real estate, are likely to have a global impact and may continue to depress inflation in both China and other markets, with discounting expected to increase in the coming quarters.
China should resist the urge to use monetary easing to combat deflation and focus instead on market-driven restructuring and real economic activities in order to achieve healthier and more sustainable growth, according to economist Andy Xie. Japan's reliance on quantitative easing and zero interest rates has perpetuated asset bubbles and hindered innovation and productivity, serving as a cautionary tale for China.
Global investors are urging China to increase spending in order to revive its struggling economy and address the deepening property crisis, as modest interest rate cuts and vague promises of support have failed to restore confidence in the market. Investors are demanding more government stimulus before considering a return, and the lack of a policy response from Beijing has raised concerns among fund managers. The wishlist of investors includes increased government spending, particularly for local governments and banks, as well as measures to address the property sector crisis and improve communication regarding private business interests.
China's economy is at risk of entering a debt-deflation loop, similar to Japan's in the 1990s, but this can be avoided if policymakers keep interest rates below a crucial level to stimulate economic growth.
China faces challenges in rebalancing its economy towards increased consumer spending due to the economic growth model that relies heavily on investment in property, infrastructure, and industry, as well as the reluctance of households to spend and the limited social safety net; implementing demand-side measures would require difficult decisions and potential short-term pain for businesses and the government sector.
China's unexpected economic slowdown, driven by excessive investment in the property sector and local government spending, is leading experts to question whether a collapse is imminent, although they believe a sudden collapse is unlikely due to China's controlled financial system; however, the slowdown will have implications for global growth and emerging markets, particularly if the U.S. enters a recession next year.
China's economic slowdown, coupled with a property market bust and local government debt crisis, is posing challenges to President Xi Jinping's goals of achieving economic growth and curbing inequality, potentially affecting the Communist Party's legitimacy and Xi's grip on power.
China is implementing measures to boost household spending, ease property policies, increase car purchases, improve conditions for private businesses, and bolster financial markets in an effort to revive the economy's recovery and improve the business environment.
China has introduced new mortgage policies to boost its property market and stimulate economic growth by allowing more people to be classified as first-time homebuyers and receive lower mortgage rates.
China's hybrid economic model, which combines state planning with market forces, is facing challenges as the country struggles with weak economic indicators, including high youth unemployment and falling prices, and the property market experiences financial distress due to government interventions and market dynamics; policymakers must implement short-term measures to boost market confidence, such as managing property-sector defaults and easing housing investment restrictions, while also undertaking long-term structural reforms to address moral hazards, promote fiscal responsibility, and protect private businesses and foreign investors.
China needs to fully utilize policy space to bolster economic growth and market expectations by making significant adjustments in fiscal and monetary policies, according to a senior economist and political adviser. The economist emphasizes the importance of sending strong signals to the market and considers options such as interest rate cuts, increased deficit-to-GDP ratio, and infrastructural improvements to address economic challenges caused by global demand stagnation and tightened US monetary measures.
Chinese officials have implemented aggressive measures to address the lack of confidence in the struggling economy, but analysts believe that more stimulus is needed for a sustained market rally and to stabilize the property sector.
Chinese state-owned banks are expected to lower interest rates on existing mortgages, with the quantum of the cut varying for different clients and cities, in an effort to revive the property sector and boost the country's economy.
China's property crisis, led by embattled property giants like Evergrande, is causing devastating consequences for small businesses and suppliers who are owed large sums of money, putting both market confidence and debt repayments at risk. The crisis has affected the entire industry and could worsen if immediate actions are not taken to prevent contagion and spillover fears. The Chinese government is urged to abandon restrictive measures on real estate credit, carry out bankruptcy proceedings for developers with capital-outflow problems, and stop intervening in the market to stabilize home prices. The outlook for Chinese developers is deteriorating, particularly for distressed developers, while state-owned developers have a stable outlook. The Chinese housing market is facing a severe crisis that is worse than Japan's market in the early 1990s, posing challenges in filling the gap in spending left by the collapsing housing market.
Guangzhou, the first major Chinese city to do so, has announced an easing of mortgage curbs in an effort to revive the property sector and stimulate the economy, a move that is expected to be followed by other top-tier cities.
China's economy is showing signs of improvement, with officials in two big cities taking steps to stabilize the property markets and attract more home buyers.
Chinese consumer spending has rebounded in certain sectors, but concerns persist over the property market and GDP growth falling below 5%, according to Shehzad Qazi, managing director of China Beige Book.
China's economic slowdown is being caused by a property market downturn, softening demand for exports, and low household spending, which poses risks to financial stability and could lead to deflation and deeper debt problems. Economists are uncertain if the government's current measures, like interest rate cuts, will be enough to boost consumption and meet growth targets. Structural reforms and measures to increase household consumption are needed to address the imbalance in the economy.
China is planning to relax home-purchase restrictions and implement new measures to address the debt crisis in its property sector, which accounts for a quarter of its economy, in an effort to boost consumer demand.
The slowdown in China's property market continues despite government measures to revive the economy, with analysts warning that the sentiment among many Chinese is too weak for these moves to be effective.
The authorities in Beijing and Shanghai are implementing measures to ease mortgage lending rules in an effort to stimulate a slowing housing market, including allowing first-home buyers to enjoy preferential mortgage rates regardless of their previous credit records. This move is expected to drive home sales in the short term, but the long-term impact is uncertain due to low consumer confidence in the face of economic uncertainty.
China's recent stimulus measures to boost its economy, including reducing down payments for homebuyers and lower rates on mortgages, are impressing the markets and may dictate the direction of the commodity market.
Chinese stocks surged as the government implemented additional measures to support the property sector, signaling a determination to boost the economy by addressing issues in the struggling housing market.
China's relief measures to support the property sector have spurred a home-buying spree in Beijing and Shanghai, with transaction volumes in both cities increasing significantly, indicating robust housing demand; however, concerns persist that this demand may not be sustained due to other restrictions and a faltering growth outlook.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
China's measures to support the property sector are lowering monthly mortgage payments for homeowners but also reducing interest earnings on bank deposits, highlighting the challenge of promoting consumer spending in a weak economic climate.
China's real estate sector is facing a split market, with sales picking up in larger cities while slowing down in smaller cities, but further policy support is expected to stabilize the finances of property developers and dispel financial panic in the next two months.
China is showing signs of a balance-sheet recession similar to Japan's, with accumulating debt and falling house prices, but there are key differences that suggest it may not face the same fate. State-owned enterprises and property developers account for much of China's debt, and households have low debt relative to their assets. However, the Chinese government's reluctance to increase spending could prolong the recession.
China's credit demand improved, deflationary pressures eased, and the yuan rallied, indicating signs of stabilization in the economy and financial markets after a sharp downturn.
China's economy is expected to grow less than previously anticipated due to struggles in the property market, leading economists to predict further downgrades and posing risks to both the domestic and global economy.
Chinese property stocks and Japanese government bonds set the tone for global markets as the Hang Seng property index dropped to a fresh September low before rebounding on news that Country Garden won creditor support to delay onshore bond payments, while the Bank of Japan's comments about potential stimulus exit in 2023 pushed the local bond market, and the week ahead is marked by important policy meetings by the Bank of England, the Federal Reserve, and the ECB.
China's recent policies to stabilize the property sector may not be enough to stimulate real economic growth, although they could generate demand, according to analysts.
China's macroeconomic challenges, including deflationary pressures, yuan depreciation, and a struggling property sector, could have broader implications beyond its borders, impacting global metal exporters, trade deals, and global inflation; however, investing in China's stocks may offer compelling valuations despite the current downturn.
Economic activity in China appears to improve in August as industrial production and retail sales show growth, however, the real estate sector continues to face challenges with property investment and sales declining, leading Moody's to downgrade its outlook for the sector.
The International Monetary Fund (IMF) plans to advise China to address issues such as weak domestic consumption, the troubled real estate sector, and local government debt, in order to boost both Chinese and global growth, according to IMF Managing Director Kristalina Georgieva. The IMF will urge China to shift its growth model away from debt-driven infrastructure investment and real estate and focus more on domestic consumption. China's aging population, falling productivity, and problems in the real estate sector are factors hindering its growth rate. The IMF is set to release new global growth forecasts, reflecting concerns about low GDP growth worldwide, with the United States being the only major economy to have recovered pre-pandemic levels. China's growth rate is crucial for both Asia and the rest of the world, given its significant contribution to global growth. However, there is a trend of some outflow from China, which needs to be monitored.
China is unlikely to devalue its currency, the yuan, despite concerns that it could do so to boost exports, as such a move would risk intensifying capital flight and tightening financial conditions, according to the Institute of International Finance. Instead, the focus will be on domestic easing measures to maintain steady growth, although there is the challenge of balancing the yuan's stability against the strengthening US dollar and other major currencies.
China's economy is facing challenges due to its real estate crisis and high levels of mortgage debt, but the government is hesitant to provide fiscal stimulus or redistribute wealth, instead aiming to rely on lending to avoid a potential recession. Banks have cut interest rates and reserve requirements, but it is unlikely to stimulate borrowing. However, economists predict that policymakers will intensify efforts in the coming months, such as changing the definition of first-time home buyers and implementing property easing measures, to address the economic downturn.
Signs of improvement in China's economy, such as improving credit demand and easing deflationary pressures, may not be enough to stabilize the economy due to bigger concerns of decreasing affordability, tight wages, and rising costs that have not been addressed. A comprehensive policy revamp may be necessary for China's economy to recover.
China's credit is expanding rapidly, with total social financing increasing by over 3 trillion yuan in August, mainly driven by government financing, indicating positive signs of economic stabilization and recovery from the slump in the second quarter. Additionally, recent policy measures, particularly in fiscal and property sectors, are expected to further stimulate the economy.
China will expedite the implementation of additional policies to solidify its economic recovery, according to state media, in an effort to address the challenges posed by the uncertain property sector and maintain the upward momentum of the economy.
