Nanjing Street, Shanghai, July 18, 2024. /CFP
Editor’s note: This article reflects the author’s opinions.
Recent economic data shows both reasons for optimism and concern. The economy is recovering from the COVID-19 pandemic, but we expected stronger performance given the supportive monetary policies. Unlike the quick recovery seen during the 2008-2009 financial crisis, current investments are rising slowly.
People’s Bank of China, Beijing, September 24, 2024. /CFP
Investment growth has been sluggish, rising just 3.4% compared to 3.1% last year, despite several cuts to the reserve requirement ratio. Unlike the previous crisis when fewer cuts achieved faster investment boosts, the current situation is less responsive.
The real estate sector is crucial, contributing significantly to GDP. However, tight financial restrictions have dampened investment, with property prices falling and sales down by 18.5%, impacting overall investment negatively.
Residential property sales gallery in Fuzhou, April 29, 2024. /CFP
The downturn in property prices has made buyers cautious, leading to rising inventory and declining fixed investment in the industry. The government recognizes the need to change its tough policies on real estate to support overall economic health.
Recent announcements include lifting purchase and sales restrictions, lowering loan interest rates, and enabling banks to lend to developers. If implemented effectively, these measures could revitalize the real estate sector and benefit the economy in the coming quarters.
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