China can no longer rely on real estate for growth
Chinese authorities face an ever-growing list of challenges and it appears they don’t have many tools left to spur the economy amid a slowdown.
The real estate market in China has traditionally played a major role in its economic development, household wealth and public sentiment. Real estate has been used by Beijing to stimulate growth during previous downturns, including one just three years ago.
But along with a Chinese penchant for investing in houses, persistent expectations of government support sent prices and the household debt burden soaring.
That’s created a delicate situation, one which analysts expect Beijing will not touch this time around, except to keep prices steady.
As Beijing tries to shift its economy to one that’s driven by consumption, the worry is that consumers will not have the means, or the enthusiasm, to spend. Already, retail sales growth has slowed significantly amid uncertainty about U.S.-China trade tensions and the impact on economic growth.
China’s rapid ascent to becoming the world’s second largest economy has brought with it a slew of problems that are both unique and complex.