BackChina’s economy holds ground as housing curbs start to bite
Even amid curbs in major cities, property development investment rose 6.6% from a year earlier in the first ten months, compared to 5.8% in the first nine
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Beijing: China’s economy held ground in October following new measures to cool property markets in almost two dozen big cities.
Any sign the world’s second-largest economy is losing steam may add to uncertainty in the global economy, which already faces the prospect that president-elect Donald Trump will impose punitive tariffs on Chinese imports. But for now, it’s all about domestic drivers, with efforts to rein in property prices tapping the brakes on China’s consumer.
“It’s probably consistent with policy remaining supportive of growth but no further ramping up or ramping down," said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “The moderation in retail sales growth is a bit of a disappointment given a desire to continue rebalancing the economy toward greater consumer spending but then again what other country in the world has 10% retail sales growth?"
China’s shoppers’ ongoing spending power was on display on 11 November, when Alibaba Group Holding Ltd’s Singles’ Day posted record sales of 120.7 billion yuan ($17.8 billion), easily topping last year’s total of 91.2 billion yuan.
“We need to see another month of data, but it could be the consumer participation in growth is declining," said Andrew Collier, an independent analyst in Hong Kong and former president of Bank of China International USA. “It’s harder for the government to control retail sales than FAI or industrial production, which is heavily state-driven."
Even amid curbs in major cities, property development investment rose 6.6% from a year earlier in the first ten months, compared to 5.8% in the first nine. While cooling prices and fewer transactions will hurt services, construction fueled by investment remains key to driving output. Growth of private investment stabilized to 2.9% in the first 10 months of 2016 from a year earlier.
“Growth momentum is stabilizing," said Zhao Yang, Nomura Holdings Inc.’s chief China economist. “But looking ahead, headwinds remain in the economy, as property markets in tier-1 cities have started to cool down. The cooling property sales in tier-1 cities will transmit to lower-tier cities and eventually drag property investment growth." Bloomberg
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