In a recent report by the National Bureau of Statistics (NBS), it was revealed that new home prices in China experienced a significant drop of 0.7% in May compared to April, marking the largest monthly decline in nearly a decade. This decline comes despite the Chinese government's efforts to revive the real estate market through various measures.
According to analysts, the real estate rescue package introduced by Beijing may take some time to show its full effect on the market. Measures such as providing cheap loans to state-owned enterprises for purchasing unsold homes from struggling developers are expected to have a gradual impact.
However, the challenges facing the real estate sector are evident in other key indicators. Property investment for the first five months of the year saw a 10.1% decrease compared to the previous year, while new property sales dropped by 28% during the same period.
Despite the struggles in the real estate market, other sectors of the Chinese economy showed signs of improvement. Retail sales increased by 3.7% in May, driven by government initiatives such as trade-in programs for used cars and old home appliances. Industrial output, although growing at a slower pace in May, still demonstrated positive momentum.
On the international front, China's exports surged by 7.6% in May, the fastest growth rate since April 2023. However, imports fell short of expectations, highlighting the uneven nature of China's economic growth.
Concerns about deflation persist as domestic demand remains weak, with the consumer price index rising by only 0.3% in May. Producer prices continued to decline for the 20th consecutive month, indicating ongoing challenges in the manufacturing sector.
Analysts believe that additional policy support may be necessary to sustain China's economic growth and meet the GDP target of around 5% for this year. Attention is now turning towards the upcoming Third Plenum of the Communist Party, which is expected to outline economic reforms for the future.
