China's economic growth target of 5 per cent at risk due to ongoing property crisis

China is expected to come close to achieving its economic growth target of approximately five per cent for the current year, according to the latest Bloomberg survey of 78 economists. However, the ongoing property crisis is increasing the risk of falling short of this target. The survey reveals that the economy is projected to grow by 5% in 2023, which represents a 10-basis point reduction from a previous poll. Analysts point to the property sector as the primary challenge facing the nation. Analysts from Poseidon Partner, a Hong Kong-based investment firm, expressed their view, stating, “The real estate sector will continue to be under mounting pressure,” despite recent government efforts to support the property market. They anticipate that individuals and companies burdened with debt from the past will continue to face difficulties. This economist survey coincides with recent research from Bloomberg Economics, which suggests that achieving the “around 5%” growth target is still possible, though not guaranteed. They estimate the likelihood of falling short of the target at 18%. China’s property crisis “poses a downside risk and could hold back regional growth,” the ADB said in its report. The Manila-based lender maintained its 2024 growth forecasts for China and India at 4.5% and 6.7% respectively. A slump in China’s property sector worsened in August, with deepening falls in new home prices, property investment and sales, despite a recent flurry of support measures, adding pressure to the world’s second-largest economy. China has in recent weeks delivered a raft of measures to boost home buying sentiment, including easing some borrowing rules and relaxing home purchasing curbs in some cities. These policies have given major cities like Beijing a tiny boost in new home sales, but some worry they might be short-lived and could potentially dry up demand in smaller cities. China’s broader economy is showing signs of stabilisation with economic figures showing quickening growth in industrial output and retail sales. However, analysts say a series of supportive policies have yet to firm up the crisis-hit property sector with major Chinese developers still fighting to avoid default. With inputs from agencies.