Economy stabilizes in Q3, but growth to slide in 2017: economist
UBS economist Wang Tao said on Thursday that China’s economy showed signs of stabilization in the third quarter, which was partly due to the heated property market in recent months.
She said that the impact of the real estate market on the general economy will ease next year, when GDP growth will slip further to about 6.3 percent.
The National Bureau of Statistics said on Wednesday that China had seen a GDP growth of 6.7 percent in the third quarter.
“This was above market expectations in general,” Wang said, noting that the good performance in the domestic property market in recent months had been a stimulus.
“First, the rebound in real estate development and investment will support the industries dealing with bulk commodities such as building materials. Second, hot sales also boosted property- related services industries,” Wang said during a press conference on Thursday.
From January to September, investment in the real estate market hit 7.46 trillion yuan ($ 1.1 trillion) in China, up 5.8 percent year- on- year. During that period, sales of housing units reached 1.05 billion square meters, up 26.9 percent year- on- year.
According to Wang, several factors contributed to the overheated property market in recent months. First, the government relaxed home purchase requirements in 2015 and in early 2016. Second, many property developers have given financial support to buyers, such as helping them arrange loans. Also, some buyers rushed to buy houses driven by panic, fearing that prices would surge soon.
Considering the rising demand, the government also launched policies like purchase restrictions and higher down payment requirements to cool the market, but those policies are not intended to totally crack down on the property market, Wang said. The strictness of those policies differs from city to city, and they will only exert a moderate influence on the real estate market.
Wang forecast that as property sales and investment chill in 2017, the domestic economy will lose a driving force and slide further.
“However, the central bank will adopt a relatively neutral credit policy to guarantee economic growth,” she noted.