China’s Property Market Still in Turmoil: Standard Chartered CEO Bill Winters Warns of Ongoing Struggles

China’s Property Market Remains Challenging

China’s property market has yet to find its bottom, according to Bill Winters, CEO of Standard Chartered. In an interview with CNBC’s JP Ong, Winters highlighted the ongoing difficulties within China’s real estate sector, which continues to exert pressure on both consumer and investor confidence.

Difficult Investing Environment

Winters described the current investment climate in China as “difficult,” noting that both consumer confidence and international investor confidence remain relatively low. He emphasized that the property market’s slow decline is a significant factor contributing to this cautious sentiment.

“The underlying issue is the property market,” Winters said. “It has not yet completely bottomed out, and while there are occasional signs of increased activity, it does not feel like we’ve truly hit a bottom in terms of prices.”

Potential Risks and Economic Impact

Winters also warned of the potential dangers associated with the property market. Historically, a bursting property market bubble often signals a forthcoming financial crisis, which is typically accompanied by more severe declines in GDP. China’s economic growth has already shown signs of slowing, with the country reporting a 4.7% growth in the second quarter of 2024, down from 5.3% in the first quarter and the lowest growth rate since early 2023.

Revised Growth Forecasts

The economic outlook for China has prompted revisions from major financial institutions. Bank of America recently lowered its GDP growth forecast for China to 4.8% for 2024, down from an earlier estimate of 5%. Additionally, forecasts for 2025 and 2026 have been trimmed to 4.5%, down from 4.7%.

Government Stimulus Measures

In response to the economic challenges, Beijing has implemented several measures to stimulate the economy, including cutting loan rates and allowing homebuyers to refinance their home loans to boost consumption. Despite these efforts, Winters pointed out that China has avoided a massive stimulus program due to concerns over rising debt levels. Instead, the country has opted for continuous, smaller stimulus initiatives, both monetary and fiscal.

Winters explained, “China is trying to avoid a severe economic spiral by implementing modest stimulus measures. The goal is to ensure recovery without overloading the economy with excessive debt.”

Expectations for the Future

Winters anticipates that while the short-term situation may be uncomfortable, the fiscal strategy being employed is prudent. He believes that the moderate stimulus approach will be beneficial in the long run.

Hao Hong, Partner and Chief Economist at GROW Investment Group, echoed similar sentiments in a separate CNBC interview. Hong suggested that China’s reluctance to launch a major stimulus might be due to the structural and cyclical downward pressure in the property sector.

Conclusion

China’s property market continues to face significant challenges, with no clear sign of stabilization. The country’s cautious approach to stimulus and the ongoing struggles within the real estate sector highlight the complexities of managing economic recovery amidst persistent uncertainty.