The ongoing turmoil in China’s property market has raised red flags for Standard Chartered CEO Bill Winters. In an interview with CNBC’s JP Ong, Winters expressed his concerns regarding the challenges in the investing environment in China. He highlighted that consumer confidence and international investor confidence were both relatively low, pointing to the property market as a key source of uncertainty. Winters mentioned that despite some sporadic signs of increased activity, the property market has yet to reach a stable bottom in terms of pricing.
Winters emphasized the potential danger of a property market bubble burst leading to a financial crisis, which could have significant implications on China’s GDP. With China’s year-on-year growth dropping to 4.7% in the second quarter, the lowest since 2023, concerns over the country’s economic stability have escalated. Bank of America recently revised its GDP growth forecast for China, indicating a downward trend for the upcoming years. Despite Beijing’s efforts to introduce measures to stimulate the economy, including interest rate cuts and home loan refinancing options, the property market remains a cause for apprehension.
While many have called for massive stimulus programs to revive the economy, Winters pointed out that China has been exercising caution due to past global economic crises caused by excessive debt levels. Instead of a one-time large-scale stimulus, China has opted for gradual monetary and fiscal policies to avoid entering a debilitating economic spiral. Winters believes that these measured stimulus efforts will provide the necessary support without going overboard, although he acknowledged that short-term discomfort might be an inevitable consequence.
Hao Hong, partner and chief economist at GROW Investment Group, echoed similar sentiments regarding China’s current economic situation. Speaking to CNBC’s “Street Signs Asia,” Hong noted the absence of strong policy stimulus measures and speculated on the reasons behind China’s reluctance to implement major stimulus programs. He suggested that structural and cyclical pressures within the property sector might be influencing Beijing’s decision to hold back on significant policy interventions.
China’s property market continues to face challenges, signaling potential risks for the country’s overall economic stability. As stakeholders monitor the situation closely, it remains essential for policymakers to strike a delicate balance between stimulating economic growth and avoiding unsustainable debt levels. With ongoing uncertainties surrounding the property market and broader economic landscape, China must tread cautiously to navigate through turbulent waters and emerge stronger in the long run.