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Newsweek
2 days ago
- Business
- Newsweek
China's Housing Market Facing Long Slump
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The devastating property crisis that broke out in China after the collapse of giants like Evergrande is far from being resolved, experts say, as new home prices in the country continue falling and new construction projects get cut down. The sector has gone "from a free fall" in the years following Evergrande's default in 2021 "to a gradual fall" today, Zhaopeng Xing, senior China strategist at ANZ, told Newsweek. What Is Happening In China's Property Market? China's property market has propelled the country's explosive economic growth over the past few decades, single-handedly lifting hundreds of millions of Chinese people out of poverty and into the middle class. But since the collapse of giant developers like Evergrande and Country Garden, the sector has been sinking, threatening to drag the Chinese economy down with it. Despite efforts from the government to revive the struggling property sector, which was once the country's economic powerhouse, recent data show that it is still unable to walk on its own feet and demand is failing to pick up. High-rise buildings under construction stand behind a Chinese national flag waving in the foreground, as cranes continue work on partially completed towers on May 07, 2025, in Chongqing, China. High-rise buildings under construction stand behind a Chinese national flag waving in the foreground, as cranes continue work on partially completed towers on May 07, 2025, in Chongqing, home prices fell 0.22 percent in 70 Chinese cities in May, the largest decline in seven months, according to figures from the National Bureau of Statistics. Existing home prices fell by an even bigger 0.5 percent, marking the steepest decline in eight months. In the same month, residential sales by value dropped 6.1 percent year-on-year, while real-estate investment plunged 12 percent from a year earlier. Kent Deng, professor of economic history at the London School of Economics (LSE), told Newsweek that there has been "no real recovery so far" in the Chinese market. "It is a story of housing oversupply," he said. "China has had 600 million permanent buildings, roughly two people a building. It will take 30-50 years to absorb them," he added. This same oversupply is leading prices to fall and new construction projects to be cut down. What Does This Mean for the Country? The latest data show that even the Chinese government policy interventions are failing to make a real dent in the situation facing homebuyers in the country, who are struggling with growing economic uncertainty linked to the trade war with the U.S. and income instability. But the central government seems determined to try to support the sector, with Premier Li Qiang pledging action during a state council meeting last week, according to state broadcaster CCTV. They might have a hard time getting the property sector out of the current slump, experts said. "Recovery will be slow as people do not have more purchasing power to buy new houses," Deng told Newsweek. The property sector plays an outsize role in China's economy, contributing to nearly a third of its GDP. Further contractions could continue hurting the country, experts said. "China's property market values 600 trillion yuan [$83.5 billion]," Xing said. "A 10-percent price fall means 60-trillion-yuan loss to households. The negative wealth effect will curb consumption and investment," he said. According to Xing, new development will not pick up in the next decade in China "as urbanization will likely come to an end by 2035," he said. In a report released on Monday, Goldman Sachs experts said that demand for new homes in China is likely to remain substantially below its 2017 peak over the next few years, especially as the country's population shrinks and continues aging. "We calculate that annual demographic demand in urban China will average only 4.1 million housing units per year in 2025-2030, compared to 9.4 million units per year in the 2010s," researchers wrote in the report shared with Newsweek. "It is striking that China's demographic demand for new urban housing likely halved within a decade." It could be a dramatic change for a country that has built its economic backbone on the property sector. While China has been trying to shift its economy away from the housing market, the result has not been good, Deng said, "because investment opportunities are very limited outside the housing market." "China will have to switch the property sector from a construction-based model to a service-like model. The transformation will change a lot of policies including land finance," Xing said. "The sector will be like real estate in other developed economies; 75-percent value added will be housing rents, not new home sales," he said. "The economy will shift away from property construction, but not real-estate services. The latter will play a bigger role in the economy."
Business Times
20-05-2025
- Business
- Business Times
China ran record budget deficit with spending blitz amid tariffs
CHINA'S fiscal stimulus pushed its four-month budget deficit to a record high, as the government ramped up support for the economy during an escalation in its trade conflict with the US. The broad deficit reached 2.7 trillion yuan (S$484 billion) in January to April, the most ever for the period, according to Bloomberg calculations based on data released by the Finance Ministry on Tuesday (May 20). The shortfall swelled by more than 50 per cent compared with a year earlier. It's the clearest evidence yet that Beijing shifted into a higher gear in deploying this year's planned fiscal stimulus to help the economy weather external shocks. US tariffs on most Chinese goods rose to a prohibitively high level of 145 per cent in April before the two countries agreed to a truce earlier this month. Outlays soared against the backdrop of stabilising earnings. Total income in China's two main fiscal books reached 9.32 trillion yuan in January to April, a decline of only 1.3 per cent year on year after a much steeper drop during the first quarter. Total expenditure rose 7.2 per cent to 12 trillion yuan, the data showed. That number combines spending under the general budget, which includes mainly everyday outlays, with expenditure in the government fund budget, which is more weighted towards capital investment projects. Looking ahead, the urgency of further fiscal support is waning after an agreement by China and the US to temporarily lower tariffs levied against each other's products. The truce, along with decent economic activity numbers for April, has led a few major international banks to raise their forecasts for China's growth this year and dial back expectations of additional stimulus by the government. Tuesday's fiscal figures have given them more reasons to bet on the government delaying new supportive measures. 'Government spending was accelerating while revenue shows signs of stabilisation,' said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'The need for expanding fiscal deficit in the middle of the year has declined.' BLOOMBERG
Yahoo
20-05-2025
- Business
- Yahoo
China Ran Record Budget Deficit With Spending Blitz Amid Tariffs
(Bloomberg) -- China's fiscal stimulus pushed its four-month budget deficit to a record high, as the government ramped up support for the economy during an escalation in its trade conflict with the US. America, 'Nation of Porches' NJ Transit Train Engineers Strike, Disrupting Travel to NYC NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The broad deficit reached 2.65 trillion yuan ($367 billion) in January-April, the most ever for the period, according to Bloomberg calculations based on data released by the Finance Ministry on Tuesday. The shortfall swelled by more than 50% compared with a year earlier. It's the clearest evidence yet that Beijing shifted into a higher gear in deploying this year's planned fiscal stimulus to help the economy weather external shocks. US tariffs on most Chinese goods rose to a prohibitively high level of 145% in April before the two countries agreed to a truce earlier this month. Outlays soared against the backdrop of stabilizing earnings. Total income in China's two main fiscal books reached 9.32 trillion yuan in January-April, a decline of only 1.3% year-on-year after a much steeper drop during the first quarter. Total expenditure rose 7.2% to 11.97 trillion yuan, the data showed. That number combines spending under the general budget, which includes mainly everyday outlays, with expenditure in the government fund budget, which is more weighted toward capital investment projects. Looking ahead, the urgency of further fiscal support is waning after an agreement by China and the US to temporarily lower tariffs levied against each other's products. The truce, along with decent economic activity numbers for April, has led a few major international banks to raise their forecasts for China's growth this year and dial back expectations of additional stimulus by the government. Tuesday's fiscal figures have given them more reasons to bet on the government delaying new supportive measures. 'Government spending was accelerating while revenue shows signs of stabilization,' said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'The need for expanding fiscal deficit in the middle of the year has declined.' Why Apple Still Hasn't Cracked AI Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race ©2025 Bloomberg L.P.
Business Times
24-04-2025
- Business
- Business Times
China kicks off special bond sale as tariffs threaten economy
[NEW YORK] China issued the first batch of special sovereign bonds for the year on Thursday (Apr 24) as part of the stimulus announced by authorities to soften the blow from simmering trade tensions with the US. The Ministry of Finance issued a three-part special sovereign bonds which had a planned size of 286 billion yuan (S$51.6 billion). The bond sale is to fund the fiscal package approved in March, but unlike sovereign debt, special bonds are issued for specific purposes and are not accounted for in China's record high fiscal deficit target of 4 per cent for the year. The latest round of issuance comes as Beijing looks to ramp up spending to defend the economy from the onslaught of 145 per cent US tariffs on Chinese goods, which can make Beijing's 5 per cent growth target for 2025 hard to achieve. 'The government is accelerating the pace of fiscal policy support to offset the tariff shock,' said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'We expect a supply peak in the next couple of months and People's Bank of China (PBOC) will keep liquidity steady.' Thursday's issuance consisted of 165 billion yuan of five-year special bonds for bank capital injection as state-owned banks struggle with thin profit margins amid the economic malaise. China plans to sell a total of 500 billion yuan of such bonds by Jun 4. The five-year notes were sold at an average yield of 1.45 per cent, according to a trader who bids at the government debt auctions. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Also on offer on Thursday were 50 billion yuan and 71 billion yuan of 20- and 30-year special bonds, respectively. Those are part of the 1.3 trillion yuan of 20-, 30- and 50-year ultra-long special sovereign notes that will be offered through October. The total issuance quota of ultra-long special sovereign bonds this year is higher than the one trillion yuan sold last year. Proceeds from the sale will be used for financing consumer goods purchases, building major infrastructure projects and encouraging businesses to update equipment. The 20-, 30-year notes were priced at 1.98 and 1.88 per cent, respectively, said the trader who isn't allowed to speak publicly. The bid-to-cover ratio for these bonds exceeded three times, in a sign of strong investor demand, the trader said. The special bond issuance results were in line with market expectations, said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'The government is accelerating the pace of fiscal policy support to offset the tariff shock.' Despite the impending supply of bonds, the market is showing no signs of stress as some expect the PBOC to cut interest rates or the amount of cash banks must keep in reserve this year to bolster growth. The benchmark 10-year bond yield was just around five basis points shy of a record low touched in February. China's overnight repo rate hovered around 1.6 per cent on Thursday, the lowest since January, in a sign of ample cash levels to help cushion the increased debt supply. 'We expect a supply peak in the next couple of months and People's Bank of China will keep liquidity steady,' said ANZ's Xing. The PBOC may use tools such as outright reverse repurchase agreements to manage liquidity, ANZ's Xing said. 'It could also consider resuming buying of government bonds or cutting the required reserve ratio to inject liquidity at proper time.' BLOOMBERG
Business Times
24-04-2025
- Business
- Business Times
China to kick off special bond sale as tariffs threaten economy
[NEW YORK] China is set to issue the first batch of special sovereign bonds for the year on Thursday (Apr 24) as part of the stimulus announced by authorities to soften the blow from simmering trade tensions with the US. The Ministry of Finance plans to raise 286 billion yuan (S$51.6 billion) via a three-part issuance later in the day, according to Bloomberg calculations. The bond sale is to fund the fiscal package approved in March, but unlike sovereign debt, special bonds are issued for specific purposes and are not accounted for in China's record high fiscal deficit target of 4 per cent for the year. The latest round of issuance comes as Beijing looks to ramp up spending to defend the economy from the onslaught of 145 per cent US tariffs on Chinese goods, which can make Beijing's 5 per cent growth target for 2025 hard to achieve. 'The government is accelerating the pace of fiscal policy support to offset the tariff shock,' said Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. 'We expect a supply peak in the next couple of months and People's Bank of China (PBOC) will keep liquidity steady.' Thursday's issuance consists of 165 billion yuan of five-year special bonds for bank capital injection as state-owned banks struggle with thin profit margins amid the economic malaise. China plans to sell a total of 500 billion yuan of such bonds by Jun 4. China also plans to issue 50 billion yuan and 71 billion yuan of 20- and 30-year special bonds, respectively on Thursday. Those are part of the 1.3 trillion yuan of 20-, 30- and 50-year ultra-long special sovereign notes that will be offered though October. The total issuance quota of ultra-long special sovereign bonds this year is higher than the one trillion yuan sold last year. Proceeds from the sale will be used for financing consumer goods purchases, building major infrastructure projects and encouraging businesses to update equipment. Despite the impending supply of bonds, the market is showing no signs of stress as some expect the PBOC to cut interest rates or the amount of cash banks must keep in reserve this year to bolster growth. The benchmark 10-year bond yield was just around five basis points shy of a record low touched in February. The PBOC may use tools such as outright reverse repurchase agreements to manage liquidity, ANZ's Xing said. 'It could also consider resuming buying of government bonds or cutting the required reserve ratio to inject liquidity at proper time.' BLOOMBERG
