Despite the economic turmoil over the past year, China’s property market continues to struggle and has not yet hit rock bottom, according to Standard Chartered CEO Bill Winters. Winters highlighted the challenging investing environment in China, pointing out that both consumer confidence and international investor confidence remain relatively low. The underlying cause of this lack of confidence, he noted, is primarily linked to the property market, which has been experiencing a slow decline without a clear end in sight.
Winters emphasized that while there have been sporadic increases in market activity, there is a prevailing sense that the property market has not reached a stable bottom in terms of pricing. The potential danger, he warned, is that a bursting property market bubble often precedes a financial crisis, leading to significant GDP declines. China’s recent GDP growth figures reflect this concern, with a decrease to 4.7% in the second quarter from a year ago – the lowest level since 2023.
In response to the economic challenges, the Chinese government has taken various steps to stimulate the economy, such as reducing loan rates and allowing homebuyers to refinance their loans to boost consumption. Despite these measures, Beijing has refrained from implementing large-scale stimulus programs due to concerns about accumulating excessive debt, as observed in other countries during the initial wave of the Covid pandemic. The government’s strategy, according to Winters, is to avoid a detrimental spiral effect while providing sufficient support to promote economic recovery.
Hao Hong, partner and chief economist at GROW Investment Group, highlighted the absence of significant policy stimulus measures in China, suggesting that Beijing may be cautious due to structural issues and ongoing downward pricing pressures in the property sector. The reluctance to implement massive stimulus programs indicates a strategic approach to managing economic challenges without exacerbating existing vulnerabilities.
The prevailing consensus among experts is that China’s property market faces continued uncertainty and instability, with the need for cautious economic policies to navigate through the ongoing challenges. While short-term discomfort may be inevitable, a gradual and measured approach to stimulus measures is perceived as essential for sustaining long-term economic resilience. As China grapples with the complexities of its property market and broader economic conditions, the focus remains on balancing growth objectives with risk management strategies to ensure sustainable development in the coming years.