China’s real estate sector continues to face challenges despite efforts by the government to stimulate growth, contrasting with positive trends seen in other segments of the economy.
According to the National Bureau of Statistics (NBS), new property sales in the first two months of this year dropped significantly by 29.3% compared to the same period in 2023.
This decline, faster than last year’s, reflects a concerning trend in the sector.
Capital Economics analysts expressed their observation, stating, “The correction in property construction is still in its early stages,” anticipating a further downturn that could impact economic growth over the medium term.
Meanwhile, other aspects of the economy such as consumption, industrial production, and infrastructure investment are showing signs of improvement.
Retail sales, for instance, increased by 5.5% during January-February compared to the previous year, with notable growth in various sectors including catering services, telecoms, and entertainment.
However, the sustainability of this growth remains uncertain. Louise Loo, a China economist at Oxford Economics, highlighted that the current uptick in consumer spending might be temporary, driven by holiday-related expenses.
Industrial output, on the other hand, experienced a significant jump of 7% during the same period, surpassing forecasts.
This growth aligns with the expansion seen in the Caixin manufacturing Purchasing Managers Index, indicating a positive trend in export-oriented manufacturing firms.
Export figures further support this notion, with a notable 7.1% increase in exports from China during January-February compared to the previous year.
Additionally, investment in fixed assets saw a 4.2% increase, mainly fueled by state-led initiatives.
Despite these positive indicators, the property market’s downturn and weak domestic demand highlight the need for continued policy support to sustain overall economic growth.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, emphasized the importance of fiscal policy support for a sustainable recovery amidst uncertain economic prospects.
