Chinese property markets are not fully sheltered from the global gloom. Nevertheless, steady government fiscal policies will steer it from going into a downward trend. The bottomline is that the economy would not be near what EU and US have and will be experiencing.
Are China's Property Prices In Freefall?
There certainly has been a great deal of commentary on China’s real estate market recently, and it’s very difficult to separate fact from fiction. I’ve spent 70 percent or more of my time each and every year for the past 20 in China, have traveled extensively throughout the country and spoken to many government and business leaders in the course of a year, and I must admit that I am often confused when I listen to what the experts have to say in the press and on television. Most of the time, I just scratch my head and wonder if they are talking about the same China.
For example, the talking heads worry whether China will have a “hard” or “soft” landing, but I see steady 8 percent to 9 percent growth for as far as the eye can see. They opine that bad loans in China’s banks could be a problem, yet Standard & Poor’s recently upgraded its ratings for Bank of China and China Construction Bank, giving the two Chinese lenders higher grades than most of their largest U.S. rivals. They describe “ghost” cities and buildings in China, and I have yet to see one.At times like this, when the commentary seems so disconnected from my own experience, I like to do a reality check by speaking with as many Chinese business leaders as I can—people that have a real stake in the economy, not economists, government officials or foreign commentators. After all, it’s possible that there is a piece of information that I may have missed and not taken into account.Fortunately, I had an opportunity to do just that last week while on a bit of a road show in Shanghai, Wuhan, Hangzhou, Wuxi, Ningbo and Hangzhou with one of our clients. In Wuxi, we met with the head of a company that is at the heart of China’s economy. In fact, the company is so pivotal that the general manager apologized for having to leave the meeting for a brief period to take a call from Beijing. Referring to the recent meeting of China’s senior leadership in the capital city, he explained that the government was very interested in hearing his views on the state of the economy.
He began by saying that China has some unique characteristics that many foreigners don’t understand, and that they tend to rely too heavily on the observations of other foreign experts. That often causes the foreign press to get the wrong take. In his opinion, internal demand in China is so large that he doesn’t see any problem with the Chinese economy remaining stable and continuing to grow. On property prices, he noted that there has been some softening, but also pointed out that many prices had gone up too quickly. He certainly didn’t see a total collapse, or anything like a freefall.