The Chinese housing market and wider economy will descend into a soft landing according to a senior official with the International Monetary Fund with in-depth knowledge of the Chinese economy. Even though the latest data shows apartment prices falling in 45 out of 70 cities and zero growth across the board, Zhu Min a deputy managing director at the IMF and former deputy governor of China's central bank believes that the increasing investment in social housing will counter the downward pressure on house prices leading to a more balanced market landing softly.
At the same conference, Reserve Bank of Australia Governor Glenn Stevens also expressed confidence in an economy he said is closing in on that of the US. "It seems likely that the Chinese economy will grow pretty strongly on average for a while yet," he said, adding that officials have "the will and the capacity" to spur the expansion as needed.
If anyone ever did doubt the Chinese government had the will to see their policies through those doubts have long since subsided. This is because the government has continually kept up the policies, even stopped local authorities from letting up even as prices tumble across the country. It's kind of like a parent disciplining a child while the other parent wants to give in because they don't like the crying.
Others also echo Min's confidence for a soft landing assisted by social housing investment. "China's home prices fell further, but it doesn't mean there will be a policy loosening any time soon," Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc, said. "The government is not worried too much about the impact of a slowing property market on economic growth because investment in social housing will still be big."
- Wednesday 21 March 2012