China’s property industry contracted again in the second quarter after a short-lived expansion in the previous three months, adding to the economy’s challenges.
The real estate sector declined 1.2% in the April-June period from a year ago, according to a breakdown of the gross domestic product data released by the National Bureau of Statistics on Tuesday. The drop reverses the first expansion in the sector since 2021 recorded in the first quarter.
The slump in the property market has weighed on China’s economic recovery, putting Beijing’s official growth target of around 5% at risk. GDP figures released Monday showed growth lost momentum in the second quarter while deflation risks are mounting.
Consumption sectors, such as hotels and catering, transportation, and retail, expanded at a faster pace in the second quarter than the previous three months, the NBS said Tuesday, partly due to a low base of comparison with last year.
The contraction in real estate comes after recent data showed property investment declined at a steeper pace in the first half of the year, home sales plunged in June, while housing prices dropped in the month for the first time this year.
Several Wall Street banks, including JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc., have downgraded their forecasts for growth after the disappointing GDP data.
Calls for more stimulus are rising but officials appear reluctant to unleash aggressive policies given concerns over high debt levels in the economy. Economists expect the People’s Bank of China to take moderate steps to ease monetary policy in the rest of this year. It’s likely to cut to the amount of cash banks have to keep in reserve in the third quarter, China Securities Journal reported Tuesday.
