In August, house and apartment prices in China fell for the twelfth straight month. With numerous measures, the authorities are trying to brace themselves against the self-inflicted burglary. However, this has so far been unsuccessful.
Although millions of apartments are empty in China, construction continues.
Anyone driving from the Huangdao district of Qingdao towards the airport can see the misery of the Chinese real estate sector with their own eyes. Kilometer after kilometer we pass half-finished high-rise buildings, where the work is obviously at a standstill. Hundreds of weathered concrete skeletons, between which no machines and workers can be seen, combine to form an unreal landscape of ruins.
Many cities in China look like Qingdao, a once booming port metropolis in the east of the country. Because more and more originally healthy real estate developers are now struggling with liquidity bottlenecks, they are stopping work on their projects. Chinese have lost confidence in the real estate market, which was once considered a safe haven. They keep their savings together instead of putting them into houses and apartments.
The crisis is also reflected in the current data that China’s statisticians presented on Friday. In August prices fell Real estate in the 70 largest cities in the country for the twelfth straight month, this time up 0.29 percent from the previous month. In July, the minus was 0.11 percent month-on-month.
Retail sales grow faster than expected
Elsewhere, one suggests itself careful relaxation the economic crisis. Industrial production rose by 4.2 percent year-on-year in August, compared to 3.8 percent in July. The picture is similar for fixed investments. They grew 6.4 percent last month after 3.6 percent in July. Retail sales rose by 5.4 percent, in July the plus was 2.7 percent. Private consumption is suffering particularly from the constant lockdowns with which China’s authorities are enforcing the zero-Covid strategy of state and party leader Xi Jinping.
According to experts, however, the recovery in August could only be temporary. It is to be expected that “retail sales will deteriorate again,” according to an analysis by Nomura. The experts write that no relaxation of the zero-Covid policy is to be expected before the end of March next year, and it is also unlikely that the government will find a solution to the real estate crisis.
No trust in leadership
As long as China’s population does not regain confidence in the real estate market, a sustained economic recovery is not to be expected. After all, according to estimates, the sector accounts for almost a third of China’s gross domestic product. But that is not to be expected. Two years ago, the fundamentally correct policy of cooling down the overheated market and ending the practice of many companies building new homes with debt began. However, this grew into a multitude of violently publicized and poorly communicated measures. It’s the same as with other issues: China’s people don’t trust their leaders, partly because they don’t have access to independent information.
Now the authorities are trying to save what may be beyond saving – and seem increasingly confused. With “real estate relief fund”, “stability fund” or “special loans” from state banks Try somehow to stabilize the slipping market – only throwing good money after bad. The news that all cities apart from the metropolises Beijing, Shanghai, Guangzhou and Shenzhen all cooling measures of the market may cancel again.
This has hardly anything to do with well thought-out and solid politics. Premier Li Keqiang, who is in charge of steering economic policy, is increasingly reminiscent of a pilot desperately trying to pull his plane back up after a stall.