China’s Economy Shows Signs of Struggle Amid Property Market Woes
By Kevin Yao
In a recent report, China’s economic growth in the third quarter of 2024 slowed to its lowest pace since early 2023. While there were some positive figures in terms of consumption and factory output, the tumbling property sector continues to pose a significant challenge for Beijing as it works to boost growth.
Since late September, authorities have implemented substantial policy stimulus measures, but the market is eagerly awaiting more details on the scope of the package and a clear plan to stabilize the economy in the long run.
The official data revealed that China’s economy expanded by 4.6% in the third quarter, slightly higher than the expected 4.5% but lower than the 4.7% growth in the previous quarter. Chief Economist at JLL, Bruce Pang, commented, “China’s Q3 2024 data is not a turn-up for the books, the performance aligns with market expectations, given the weak domestic demand, a struggling housing market, and slowing export growth.”
Despite the challenges, officials remain optimistic about achieving the government’s full-year growth target of around 5%, thanks to further policy support and potential cuts to banks’ reserve requirements.
While industrial output and retail sales data for September exceeded expectations, the ongoing weakness in the property sector highlights the need for additional support measures.
A Reuters poll suggests that China’s economy may expand by 4.8% in 2024, falling short of Beijing’s target, with a further slowdown to 4.5% expected in 2025.
The Dilemma of the Property Sector
Consumer spending remains weak due to the significant impact of the struggling property market, which has affected businesses across various sectors. Major companies, such as EssilorLuxottica, have reported lower revenue in China due to weak consumer demand.
Despite multiple rounds of policy support, the property market shows no signs of improvement, with new home prices falling at the fastest pace since 2015. Other indicators, like crude steel output and export growth, also present concerns for the economy.
Overall, policymakers are aiming to shift focus towards stimulating consumption to drive growth, but the effectiveness of recent monetary measures and the need for long-term structural reforms remain subjects of debate.
Experts warn that Chinese authorities may be falling short in addressing critical structural challenges, and further action is needed to ensure sustained growth in the economy.
As China navigates the complex landscape of economic recovery, the road ahead remains uncertain, with both opportunities and obstacles shaping the country’s financial future.