China’s real estate sector, despite government efforts to stimulate it, has not seen significant improvement, contrasting with other parts of the economy that are showing signs of stabilization.
In the first two months of this year, new property sales totaled 1.06 trillion yuan ($147 billion), representing a 29.3% decline compared to the same period in 2023, according to data from the National Bureau of Statistics (NBS). This drop marks a much faster pace of decline compared to the year-ago period when new property sales only dipped by 0.1%.
Property investment also fell by 9% in the January-to-February period, a faster decline than the 5.7% decrease registered during the same period last year.
Capital Economics analysts noted in a research note that the correction in property construction is still in its early stages and anticipate it to halve in the coming years, which could impact economic growth over the medium term.
On the other hand, other sectors of the economy, such as consumption, industrial production, and infrastructure investment, are showing signs of improvement. Retail sales increased by 5.5% in January-February from the same period a year earlier, slightly higher than the expected 5.2% increase from a Reuters poll of analysts.
Industrial output surged by 7% during the first two months of this year from the same period in 2023, surpassing the 5% growth forecast in the Reuters poll. This growth is in line with the strong Caixin manufacturing Purchasing Managers Index, which rose to 50.9 in February, marking a fourth straight month of expansion.
The growth in factory output may be driven by strong export demand, as separate customs figures showed that China’s exports jumped by 7.1% in the January-to-February period from a year ago, exceeding market expectations.
