China’s economic landscape is indeed daunting. The country is still facing a deepening crisis, marked by plummeting retail sales, mainly caused by a collapse in the property market. In November, the retail sales reading plummeted to its lowest level in nearly three years, prompting urgent calls for intervention from the nation’s leadership. This reality has fed fears as China watches the rise of acute economic threats that endanger a broader stability.
In light of these chilling trends, China’s central leadership has called for a series of steps aimed at boosting consumer spending. And officials in China understand that boosting consumption is key to offsetting the impact of the economic malaise. And they’re taking more targeted approaches to persuade households to loosen their wallets, which might, they hope, help stoke the fires of greater economic growth.
At the same time, the government’s attention is increasingly turning towards stabilizing the asset-strapped property sector. The past few months have forced significant stress upon that real estate market. We know that many developers are in dire economic condition, and sales of properties have tanked. As market conditions begin to stabilize, the government is pushing initiatives to shore up buyer confidence. These initiatives are designed to spur additional investment in housing. Our ultimate aim is a more resilient property market that will help drive a deeper economic recovery.
No one in China’s leadership underestimates the difficulty of the times. The ever-present cloud on the horizon remains a possible growth slowdown, higher unemployment, and a further fiscal squeeze on employers. As these factors converge, they generate a perfect storm that makes it a perilous time to be a consumer as well as an investor. The Administration knows that decisive action must be taken now in order to relieve these dangers and stabilize the economy.
As inflation continues to pile pressure on household budgets, the recently released November retail sales figures are a sharp reminder of how urgent these imperatives are. Yet the consumer confidence has recently plummeted to a nearly three-year low. This drop is exacerbated by continued volatility in the real estate sector. China’s government has promised to address serious economic problems directly. They will adopt targeted, evidence-based policies and anticipated initiatives to fill in these gaps and lead these efforts.