China’s prolonged housing crisis continues to hamper its economic recovery, despite government stimulus measures aimed at revitalizing the property sector. New economic data reveals worsening conditions, with new home prices falling nearly 4% in May year-over-year, marking the steepest monthly decline in almost a decade. Property investment also dropped by 10% in the first five months of the year.
Efforts to boost demand and absorb excess supply, such as removing minimum mortgage interest rates and allowing local governments to purchase unsold properties, have not yet yielded significant results. Goldman Sachs economists noted that “continued policy easing is still necessary, especially on the demand side and in the property market.”
Compounding the issue, China’s strategy to lean on export-led growth, particularly in subsidized clean energy products, is facing global resistance. Industrial output growth slowed to 5.6% in May, below expectations and down from nearly 7% in April. The EU recently announced higher tariffs on Chinese electric vehicles, citing unfair subsidization, while the U.S. also imposed increased tariffs last month.
Amid these challenges, a slight increase in retail spending provided a glimmer of hope, rising 3.7% year-over-year in May. However, China’s post-pandemic recovery remains uncertain as both domestic and international economic pressures persist.
