Evergrande is a poster child for property sector risks

Evergrande is a poster child for property sector risks

Evergrande appears to be getting closer to a reckoning over the scale of its liabilities as regulators, banks and local governments tighten the screws. It is just the largest of many developers that have leant heavily on pre-sales and on creative accounting to circumvent rules on borrowing. The government’s priority will be to ensure that any restructuring is orderly. But a slowdown in property construction activity will be hard to avoid.
Julian Evans-Pritchard Senior China Economist
Continue reading

More from China

China Economics Update

Pullback in easing expectations overdone

The Loan Prime Rate (LPR) remained on hold for the 18th straight month today. And investors have recently pared back their expectations for monetary easing. But given growing economic strains, especially in the property sector, we still think the PBOC will cut policy rates before long.

20 October 2021

China Data Response

China GDP (Q3), Activity & Spending (Sep.)

In q/q terms, official GDP growth slowed to a crawl last quarter. And our China Activity Proxy points to a sharp contraction. Although some of the recent weakness in services is now reversing, industry and construction appear on the cusp of a deeper downturn.

18 October 2021

China Economics Weekly

Property downturn deepens, triggering easing

Supply-side disruptions mean there is an unusual amount of uncertainty about China’s recent economic performance. But one thing that’s clear is that the property sector downturn has gathered pace in recent weeks. Policymakers have responded by allowing banks to step up mortgage lending. Other easing measures are likely to follow, including rate cuts. But limits on developer financing are here to stay.

15 October 2021

More from Julian Evans-Pritchard

China Activity Monitor

Downhill from here?

Our China Activity Proxy (CAP) suggests that growth accelerated in q/q terms last quarter but that output edged down in June on the back of softer industrial and construction activity. We think China’s COVID-19 rebound has reached its limits and that output will drop back further during the rest of this year.

22 July 2021

China Data Response

China GDP (Q2), Activity & Spending (Jun.)

China’s GDP growth dropped back in y/y terms last quarter as the base for comparison became less flattering. In q/q terms, output rose at a slightly faster pace than in Q1, when a flare-up in virus cases weighed on services activity. But sequential growth remained more subdued than over most of the past few years and momentum is likely to remain weak during the second half of this year.

15 July 2021

China Data Response

China Trade (Jun.)

Headline trade growth was stronger than expected last month, partly thanks to an increased supply of semiconductors. But exports remained below their recent peak and we still think shipments will soften in the coming quarters.

13 July 2021
↑ Back to top