One of the more striking numbers in Beijing’s Q4 data haul was an estimate that China’s population grew by just 0.03% last year. 2022 is looking even more likely to be the year that China’s population begins shrinking outright, crystallising the government’s socio-economic challenge. Housing demand in urban areas is a key vulnerability of this demographic shift. As a result, the stock of commercial housing under construction is likely to fall as projects are completed and current levels won't be seen again. “The positive (but diminishing) contribution to upstream industrial demand and broader GDP growth from homebuilding could soon turn into an outright drag,” says Julian Evans-Pritchard, our Senior China Economist.
Related link: Peak homebuilding
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- Our Evergrande page gathers all our key analysis about China's struggling developers, including Mark Williams on construction's structural decline.
- Our analysis of China's Q4 GDP release discusses why official growth estimates sit at odds with the trend captured by our proprietary China Activity Proxy.