China needs ‘forceful’ action on its real estate woes, says IMF
China’s real-estate woes require a “forceful” response by officials there to restore confidence, the International Monetary Fund said.
Speaking at a press conference after unveiling lower economic growth forecasts for the country as part of the Washington-based lender’s World Economic Outlook, chief economist Pierre-Olivier Gourinchas highlighted the need for robust policy.
“Clearly what this is calling for is forceful action by the authorities,” Gourinchas told reporters in Marrakech, Morocco on Tuesday (Oct 10).
Beijing officials should “help restructure struggling property developers, to make sure that there isn’t any increase in financial instability, to make sure it remains localised in the real estate market and doesn’t spread out into the broader financial system, and help restore confidence of households,” he said.
Gourinchas spoke as news emerged that China is considering raising its budget deficit for 2023 as the government prepares to unleash a new round of stimulus to help meet the official growth target.
The Chinese government has stepped up aid for the economy in recent months with piecemeal actions. It has lowered key interest rates, freed up more long-term cash into the banking system, added support for housing sales and household consumption, and accelerated the issuance of special local government bonds since August.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Even so, the outlook has shown little sign of improvement.
The IMF cut its growth forecast for China for this year to 5 per cent from 5.2 per cent, and for next year to 4.2 per cent from 4.5 per cent, saying that the economy is losing momentum because of declines in real estate investment and housing prices that endanger government revenues from land sales, as well as weak consumer sentiment. BLOOMBERG
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Property
Consortium led by UOL, CapitaLand Development places top bid of S$805.4 million for Holland Drive site
China’s property ‘whitelist’ lifeline stutters amid sector gloom
CDL acquires Hilton Paris Opera Hotel from Blackstone funds for 240 million euros
Vang Shuiming sentenced to 13 months, six weeks’ jail
Big-name funds pile into real estate debt as banks retreat
CK Asset cuts prices for Hong Kong houses by a third to boost sales