News Summary

• It is unlikely that the real estate sector will trigger a widespread financial crisis.Going forward, the real estate sector will stabilize thanks to both supply and demand side policies..
• On the demand side, recent relaxations in down payment for second or third properties, reduced mortgage rates, and a new property sales tax rebate are incentivizing home buyers.But the real estate sector will remain subdued due to slowing urbanization and population growth..
• As investment in the real estate sector falls, credit has been directed to the industrial sector to continue financing industrial production and innovation..
• Outside of the real estate sector, private investment grew by 9.1%.Consumption also saw a strong rebound, though exports fell by 6.4% year-on-year in October 2023, marking a six-month consecutive decline in line with weak global demand and the trend towards deglobalization..
• While pundits not long ago were debating China’s rise, the emerging consensus is now heralding an end to the “China miracle.” China’s old model of credit-fuelled, investment-driven growth has been severely undercut by the real estate crisis, as well as weak consumption and export demand..
• Final consumption expenditure has contributed to 57% of GDP growth in the past decade, though Covid-19 and property market readjustments have dampened consumption demand.To encourage household consumption, China first needs to provide conditions for the private sector to create more jobs and raise wages..