China struggles to get rid of weak consumer spending and real estate woes

China struggles to get rid of weak consumer spending and real estate woes


China’s economic data showed that momentum slowed further last month, and the cautious attitude of consumer spending has exacerbated the pressure on China’s troubled real estate industry.

Retail sales are an important indicator of consumption. In November, it grew by only 3.9% year-on-year, which was far lower than the 4.7% predicted by economists.Slightly improved Industrial activityAn increase of 3.8%, but was overshadowed by the decline in investment across the real estate industry.

New home prices fell 0.3%, the biggest drop since the beginning of 2015 For the third consecutive month Decline. In the year to the end of November, China’s real estate investment increased by 6%, while at the end of October it increased by 7.2%.

The weakness of China’s huge real estate industry (which accounts for more than a quarter of GDP) is putting heavy pressure on the economy. Reiterate its commitment Take strict coronavirus precautions.

Large real estate developers have Work hard to bring enough cash Repayment of debts, and several defaults in recent months, have undermined market confidence.

“We expect the real estate downturn to continue into the first half of 2020, and then real estate activity will recover in the second half of the year as concerns about defaults by property developers have eased,” said Tommy Wu, China economist at the Oxford Economics Institute.

The consulting firm pointed out that the housing start rate and housing sales calculated by floor space were down 22.4% and 16.3% year-on-year, respectively. According to data from the National Bureau of Statistics, the prices of new houses in China’s 70 largest cities have fallen compared with October, but are still higher than in the same month last year.

Last week, Evergrande, the world’s most indebted developer, Finally announced the default Fitch, the US rating agency, failed to pay interest on its international bonds for months.

Before the group’s payment deadline last Monday, the People’s Bank of China injected nearly US$200 billion in liquidity into the financial system by lowering the deposit reserve ratio (an important interest rate for banks).The decision was widely interpreted as Trying to calm the market Developer’s question.

The official has hinted that they will Relax monetary policy to support growth, But they are also expected to pledge to take measures to cool the real estate industry and reduce debt levels.

Shimao, a highly rated company, is the latest developer to find itself in the center of a market sell-off this week. The company’s $1 billion bonds due next year fell to 64 cents against the U.S. dollar, the lowest level on record.

In a statement issued by its Shanghai subsidiary this week, the company stated that its operations are “normal.”

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