Real Estate Crisis Could Drag China’s Economic Growth Down to Lowest Level Since 1990s

• 17 November 2021
• International News
• 1335 Views

Experts have projected that China’s economy could slow down to the lowest level seen since way back in the 1990s, mainly due to its new policies to reduce dependence on the property sector.

Beijing’s pressures on the real estate sector such as increasing tax, restricting mortgage, among other policies, could cut their growth forecasts in 2022 to below 5%, as the real estate sector contributes a large extend to the economy, reported Al Jazeera on 16 November.

According to the BBC, the Chinese property crisis has caused new construction in China from January to October to fall by 7.7%, compared to a year earlier.

Besides, housing prices also saw a 0.2% drop in October, which is the biggest fall seen in China since February 2015.

Rob Subbaraman, Nomura’s chief economist, estimates China’s slowdown to go down to 4.3% next year from 7.1% this year can has the potential to directly reduce world GDP growth by around 0.5 percentage points.

Subbaraman added that Beijing is willing to sacrifice some short-term growth for greater long-term stability. He added that China views the real estate sector as a threat to economic stability and want to shift priority to sectors like hi-tech manufacturing instead.

Photo credit to CGTN

 

• Analysis
• Economy and Finance