Despite ongoing struggles in the property sector, China’s economy started the year with a strong 5.3% growth rate in the first quarter of 2024, exceeding expectations of a slower growth rate of 4.6%. However, consumer confidence was down as first quarter retail sales growth only came in at 3.1%.
Property investment fell by 9.5% during the same period, highlighting the difficulties faced by real estate firms in China. The ongoing crisis in the property market has been a significant challenge for the country, accounting for 20% of its economy. Recent data showed a significant decline in new home prices in March, marking the fastest pace of decrease in over eight years. This was further emphasized when Evergrande, a major property developer, faced a court order for liquidation in Hong Kong. Other developers such as Country Garden and Shimao have also encountered financial challenges in the city.
Fitch, a credit ratings agency, revised its outlook for China citing growing risks to the country’s finances amidst economic difficulties. While China’s economy has historically experienced rapid growth with an average annual GDP increase close to 10%, recent data and challenges in the property market indicate that adjustments and solutions are needed to sustain future growth.