Despite ongoing issues in the property sector, China’s economy had a strong start to the year. Official data revealed that the country’s gross domestic product (GDP) grew by 5.3% in the first quarter of 2024, surpassing expectations of a slower growth rate of 4.6%. However, first quarter retail sales growth declined to 3.1%, indicating challenges in consumer confidence.
Recent data also showed a significant decline in new home prices in March, marking the fastest pace of decrease in over eight years. The real estate industry crisis was further highlighted when Evergrande, a major property developer, faced a court order for liquidation in Hong Kong. Other developers, such as Country Garden and Shimao, have also encountered financial challenges in the city.
Fitch, a credit ratings agency, revised its outlook for China, citing growing risks to the country’s finances amidst economic difficulties. While China’s economy historically experienced rapid growth, with an average annual GDP increase of close to 10%, recent data and challenges in the property market indicate a need for adjustments and solutions to sustain growth in the future. Experts emphasized the importance of households contributing to economic growth if China aims to reach its target growth rate of around 5%. Property investment fell by 9.5% during the same period, highlighting the struggles faced by real estate firms in China.