Despite past year of turmoil, China’s real estate market still hasn’t bottomed out Standard Chartered Bank CEO Bill Winters.
In an interview with CNBC’s JP Ong, Winters said China’s investment environment is “difficult,” explaining that consumer confidence and international investor confidence are relatively low.
“We know that the underlying source of a lot of the confidence issues is the housing market, and the housing market hasn’t quite hit bottom yet, so it’s a slow decline,” he added.
“There are some signs from time to time that we’re seeing an increase in activity, but at the same time, we haven’t really found a true bottom in the price,” Winters noted.
The danger, he said, is that bursting housing market bubbles in other markets often herald a financial crisis, which is often accompanied by a larger decline in gross domestic product.
China’s annual growth in the second quarter was 4.7%, lower than the 5.3% in the first quarter and the lowest level since the first quarter of 2023.
Last week, Bank of America lowered China’s GDP growth forecast for 2024 to 4.8% from the previous 5%, and lowered China’s GDP growth forecast for 2025 and 2026 from 4.7% to 4.5%.
Beijing has taken a number of measures to try to stimulate the economy, including lowering loan rates and most recently allowing homebuyers to refinance their home loans to free up money for consumption.
Winters explained that the reason why China has not launched a large-scale stimulus plan is because China saw what other countries did during the first wave of the new crown epidemic, which caused debt levels in various economies to rise sharply.
“I think what we’re seeing is these continued, small stimulus packages, monetary and fiscal policy, to make sure that we don’t get into a bad spiral that’s really hard to recover from… Our expectation is that the stimulus will be sufficient, but it won’t be Excessive,” he said.
So he thinks it’s going to be a little uncomfortable in the short term, but from a fiscal perspective, “it’s going to be a good thing.”
In addition, Hong Hao, partner and chief economist of GROW Investment Group, told CNBC’s “Street Signs Asia” program that there are currently no signs of strong policy stimulus.
While he said “we can only speculate” on why Beijing has not launched any large-scale stimulus measures, he believes that China is delaying the implementation of major policy stimulus measures as the real estate industry faces structural and cyclical downward price pressures.
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