{"id":76908,"date":"2023-10-26T01:52:04","date_gmt":"2023-10-26T05:52:04","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/chinas-property-crisis-haunts-the-economy-heres-one-glimmer-of-hope\/"},"modified":"2023-10-26T01:52:07","modified_gmt":"2023-10-26T05:52:07","slug":"chinas-property-crisis-haunts-the-economy-heres-one-glimmer-of-hope","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=76908","title":{"rendered":"China\u2019s Property Crisis Haunts the Economy. Here’s One Glimmer of Hope."},"content":{"rendered":"
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Shanghai resident Li Wenming is a self-employed installer of blinds and screens for windows and doors. He said August and September are normally boom times for his services, as the Chinese southern city\u2019s scorching temperatures cool and people keep their windows and doors open, thanks to protective screening.<\/p>\n

But China\u2019s seemingly immovable economic dark cloud\u2014its property crisis\u2014remains directly overhead. The sector has an outsize drag effect on a range of businesses, including small firms and services. As housing sales decline, so does the demand for furniture, renovation and interior decoration, and even services that new homes require such as hooking up internet and utilities.<\/p>\n

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Li\u2019s services felt the effects of the steady decline in home sales. \u201cI\u2019m normally too busy to handle all my installation requests,\u201d he said. \u201cSome days in August I was working half-days.\u201d<\/p>\n

The sluggishness of China\u2019s economy this year has lowered expectations so much that last week\u2019s announcement that the economy expanded slightly in September above forecasts seemed like celebratory news among the media and the government.<\/p>\n

The economy grew at 4.9% in the third quarter year-over-year, just beyond the 4.6% expected from a Reuters poll of economists. It grew 6.3% the quarter before.<\/p>\n

Most areas of the economy were flat. But retail sales\u2014a proxy for consumption\u2014and services were bright spots. Both have long been areas China says it wants to transition its economic model toward, but Beijing continues to plow most stimulus measures into already bloated infrastructure development.<\/p>\n

Home prices, though, fell again in September, reflecting a decline in demand. When asked what he planned to do if weak demand continued, Li said, \u201cI don\u2019t know. Many of my friends have become delivery drivers when their main jobs slowed or ended.\u201d<\/p>\n

Indeed, the demand for delivery and dining is robust compared with other consumer areas. \u201cThey don\u2019t have half days,\u201d Li said, referring to his busy delivery-driver friends.<\/p>\n

But because property is a massive part of the Chinese economy and is where Chinese invest most of their savings, the crisis extends far beyond property-adjacent sectors like renovation or furniture.<\/p>\n

\u201cThe National Day golden week tourism data, together with the still above-50 September services [purchasing managers indexes], suggest the services recovery has decelerated but continues,\u201d Goldman Sachs analysts wrote in a recent note.<\/p>\n

The deceleration is mainly attributable to a crisis in consumer confidence, driven by the fall in property prices, the analysts said.<\/p>\n

\u201cWe believe additional policy easing will be necessary for further recovery in consumption and services, especially given the continued property downturn and still-dampened confidence,\u201d they said.<\/p>\n

The government\u2019s hand, particularly easing loan requirements for the sector\u2014was visible in some of the gains in services. Corporate borrowing nationally hit one of its lowest levels on record, official data showed. \u201cBut the composition of that borrowing suggests some semblance of governmental design,\u201d analysts at China Beige Book (CBB) wrote in a recent report.<\/p>\n

While borrowing in real estate and commodities fell sharply, retail and services firms increased their borrowing by three percentage points each from last quarter. Perhaps more notable, private firm and small and medium-size enterprise borrowing also rose, \u201cconfirming they have not simply been crowded out of the queue, while large firm borrowing fell,\u201d Shehzad Qazi, CBB\u2019s managing director, told Barron\u2019s.<\/em><\/p>\n

China\u2019s economic data is notoriously opaque and unreliable, and they offer little fine-grain detail. But official data hint at where borrowing might have helped.<\/p>\n

Year-over-year, hospitality and catering grew 14.4% last month, IT and software 12.1%, transport, warehousing, and postal services 7.5%, and financial services 7%. The subsectors span small and large established firms, data show.<\/p>\n

In entertainment, from June to September, domestic box office receipts hit 23 billion yuan ($3.2 billion), the highest recorded amount ever for that period, according to data from cinema tracker Maoyan. Sales came disproportionately from domestic productions.<\/p>\n

The film-going bonanza may reflect both a trend of Chinese getting out of the house even months after the end of Covid restrictions and an escape from the recent record summer heat. In August, Alex Hu, an undergraduate student in Shanghai, said he regularly strolls the city\u2019s enormous malls\u2014which all house movie theaters\u2014for their air conditioning. \u201cI\u2019ve seen two movies this summer just getting out of the heat,\u201d he said.<\/p>\n

Write to editors@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Shanghai resident Li Wenming is a self-employed installer of blinds and screens for windows and doors. He said August and September are normally boom times for his services, as the Chinese southern city\u2019s scorching temperatures cool and people keep their windows and doors open, thanks to protective screening. But China\u2019s seemingly immovable economic dark cloud\u2014its […]<\/p>\n","protected":false},"author":1,"featured_media":76909,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-76908","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nChina\u2019s Property Crisis Haunts the Economy. 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