As China’s economic recovery continues to underwhelm, observers’ sights are turning from the country’s intractably weak consumer sector to the more worrying downturn in the enormous Chinese real-estate market. Sluggish economic growth in general and a softening property market in particular have increased expectations for stimulus measures to inject life into a post-COVID recovery that has fallen vastly short of expectations.
So far, however, policy support for both retail consumption and real estate has been small and sporadic, with most funds going instead to China’s traditional stimulus destination of choice: infrastructure. The dour property data cast a pall over China’s overall economic outlook, as the sector accounts for an estimated 30% of the country’s gross domestic product. But the 1.2% contraction in value-added real-estate sales for the second quarter — announced Tuesday by the National Bureau of Statistics — came just hours after a separate data dump showed weakness across sectors including retail sales and lackluster GDP expansion. Don’t miss: Wall Street has one number in mind after China’s GDP report Also see: Investors start to fret that China, Europe may drag U.S. economy down with them In response, Morgan Stanley, JPMorgan Chase and Citigroup downscaled China’s full-year growth estimates by at least half a percentage point, to 5% each. The pandemic-plagued years of 2020 and 2022 — when China recorded growth of 2.2% and 3%, respectively — were assumed to be blips for an economy that has expanded at annual rates above 10% for much of the last 40 years. Many are now questioning whether lower growth is a new normal for the world’s second largest economy. And in many ways the property slump is a microcosm of this remaking of the country’s economic development.
“ ‘I don’t need new curtains or a sofa,’ said one 58-year-old retiree in Beijing, referring to new government commercial incentives. ‘I’d like the va …
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