China’s property market, despite all the turmoil of the past year, has yet to bottom out Standard Chartered CEO Bill Winters.
Speaking to CNBC’s JP Ong, Winters described the investment climate in China as “difficult,” citing relatively low consumer confidence and international investor confidence.
“We know that the main source of a lot of the confidence questions is the property market, and the property market hasn’t bottomed out yet, so it’s been going down slowly,” he said.
Winters noted that “there are some signs that we’re seeing an uptick in activity from time to time, but at the same time, we don’t feel like we’ve really found a true bottom in terms of price.”
The danger, he said, is that a burst property bubble in other markets usually signals a financial crisis, which is usually accompanied by a more significant drop in GDP.
China posted 4.7% growth in the second quarter from a year ago, down from 5.3% in the first quarter and the slowest since the first quarter of 2023.
Last week, Bank of America cut its GDP growth forecast for China to 4.8% for 2024 from 5% previously, and also cut its forecasts for both 2025 and 2026 to 4.5% from 4.7%. down to
Beijing has taken several steps to stimulate the economy, including cutting interest rates and, most recently, allowing home buyers to refinance their home loans to free up money for consumption.
Winters explained that the reason China has not embarked on a massive stimulus program is because it saw what other countries did during the first wave of Covid, which saddled economies with sharply higher debt levels.
“I think we’re seeing these continued, small stimulus programs, monetary and fiscal policies that are really being managed to make sure we don’t get into a vicious spiral that’s going to be difficult to recover from… the stimulus will be enough, but not too much,” he said.
So he thinks it will be a little uncomfortable in the short term, but financially, “it’s going to be a good thing.”
Separately, Hao Hong, partner and chief economist at GROW Investment Group, told CNBC’s “Asia Street Signs” that there are no signs of strong policy stimulus yet.
While he said “we can only speculate” on why Beijing has not introduced any massive stimulus, he thinks China is pulling back on major policy stimulus due to the structural and circular downward price pressure it faces in the property sector. .
