Despite the challenges faced in the past year, Standard Chartered CEO Bill Winters believes that China’s property market has not yet hit rock bottom. In a recent interview with CNBC, Winters expressed his concerns about the investing environment in China, citing low consumer and international investor confidence. He highlighted the fact that the property market remains a central source of uncertainty and has been on a slow downward trajectory.
The Search for Stability
Winters pointed out that while there have been occasional upticks in market activity, there is still no definitive sign of a bottom in terms of property prices. The lingering danger, he warned, is the possibility of a property market bubble bursting, which historically has preceded financial crises in other markets. This instability could lead to more significant declines in GDP growth, as seen in China’s recent economic performance.
China recorded a 4.7% growth in the second quarter of the year, a decrease from 5.3% in the first quarter and the lowest figure since 2023. Bank of America recently revised its GDP growth forecasts for China, reflecting a more cautious outlook for the coming years. Despite Beijing’s efforts to stimulate the economy through various measures such as interest rate cuts and mortgage refinancing, there are lingering concerns about the effectiveness of these policies in light of the ongoing challenges.
Winters emphasized that China has been hesitant to implement large-scale stimulus programs due to the lessons learned from other countries’ experiences during the initial wave of the Covid pandemic. The fear of accumulating unsustainable debt levels has prompted Chinese policymakers to opt for targeted and incremental stimulus measures. While this approach may lead to some short-term discomfort, Winters believes it is a necessary step to avoid long-term economic repercussions.
Hao Hong, partner and chief economist at GROW Investment Group, echoed Winters’ sentiments about the lack of aggressive policy stimulus in China. He suggested that structural issues and downward pricing pressures in the property sector may be influencing Beijing’s cautious stance on implementing major stimulus packages. The absence of significant policy interventions raises questions about the government’s strategy to address the challenges facing the property market and the broader economy.
China’s property market continues to face uncertainty and challenges as it navigates through a period of sluggish growth and market volatility. The cautious approach taken by policymakers reflects the complexity of the economic landscape and the need to balance short-term interventions with long-term stability. As investors and analysts monitor the developments in China’s property market, the key question remains: Will the country be able to find a sustainable path towards growth and stability amidst ongoing uncertainties?