China’s property market downturn | Swiss Re

1Economic Insights: Inflation in China: muted, reflecting weak demand, Swiss Re Institute, July 2023.

2This is lower compared to the peak of impact estimated as 32% around 2020. How China could avoid a 1990s Japan situation, Morgan Stanley Research, 8 August 2023.

3See, for example, “Country Garden misses a bond payment, signals possible default on part of its US$16.5 billion offshore debts as China’s housing slump persists,” South China Morning Post, 10 October 2023.

4According to statistics of the People’s Bank of China (PBoC), and off-balance-sheet estimate by the China International Capital Corporate.

5The required proportions were previously 30-35% for first-time buyers and 70-80% for second-home buyers in most Tier 1 cities, before the PBoC and NAFR standardized minimum down payment requirements at 20% for first- and 30% for second-home buyers in August 2023.

6Goldman Sachs estimates the share is 85%. See Q&A on China’s property downturn and its implications, Goldman Sachs, 23 August 2023.

7Data source: PBoC, China Trustee Association, Wind. We used the total of bank loans, trust loans and domestic bond to estimate developers’ leverage ratio, which may be smaller than other market estimates (eg, Goldman Sachs op. cit.: 20.5% of GDP by 2020).

8Note: the fiscal deficit budget was set at 3% for 2023 but actual level reached 3.8%, with additional fiscal injection in October 2023. See China’s planned fiscal expansion will boost growth, Economist Intelligence Unit, 23 October 2023.


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