China's Economic Overview and Challenges
China faces the delicate challenge of propping up growth while
deleveraging the property sector
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Deleveraging the property sector has a
real impact on the economy
33%
At least one third of local
government revenues are derived
from land sales, and another 10%
to 15% from taxes on
development.
About 70% of household wealth in
China is in real estate holdings.
70% Private consumption will be
20%-30%
undermined by a property market
downturn.
Construction, real estate services,
and construction materials such as
steel and cement will be affected.
Some estimate that the property
sector accounts for 20%-30% of
China's economy.
Yet the government seems determined to
press ahead, albeit cautiously
2021 Central Economic Work Conference &
Recent Policy Highlights
"Houses are for living in, not speculation”
This principal has been reiterated since 2017
Policy implementation varies between cities
Local governments may have greater flexibility in
adjusting their restrictions in terms of homebuyer
qualifications and financing
Cut in banks' reserve requirement ratio and
loan prime rates
These piecemeal steps are a gesture to soothe
market concern
BEA東亞銀行
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