Sumary of Looking for Silver Linings Amid China's Bleak Economic Outlook:
- Construction site of an Evergrande housing complex in Beijing on Sept.
- 13, 2021. Greg Baker/AFP via Getty Images The news out of China isn’t doing much to lift the dour sentiment on Chinese stocks, with the latest spate of data showing an economy in the midst of a slowdown and fallout from property developer China Evergrande Group ‘s debt travails continuing.
- Pantheon Macro economist Freya Beamish writes in a note on Wednesday that she remains worried: “There should be a rebound in September but a speedy pickup in consumption would mean households dip into the savings they have built up during the pandemic, though that seems unlikely in the current backdrop of uncertainty.
- The view from the property market, a major source of economic growth, has been gloomy as well, with home sales by value falling 19.7, the biggest decline since the throes of the pandemic.
- Still unknown is the political and economic fallout from Evergrande’s troubles, with protests from frustrated investors and those who pre-bought apartments.
- China has been targeting the leverage held by property developers and trying to bring down housing costs as authorities tackle growing inequality.
- But the pressures on the property developers brings challenges to the economy, especially as construction is a key source of growth and commodity demand, Williams writes.
- “The central concerns of property policy now appear to be the level of housing costs and developer leverage,” writes Williams, adding that a slowdown is unlikely to push policy makers to relax limits on developer borrowing.