May 2022 China Macro Data Recap

While headline industrial value-added surprisingly expanded by 0.7% y/y in May, most official subcomponent data continued to reveal a contracting economy. The property sector is now a significant drag on investment activity and overall economic momentum. Easing COVID restrictions will be essential to catalyze a more sustainable rebound later in the year, but any recovery will be modest in comparison to what occurred in 2020.

Posted June 21, 2022
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Property Market Chartbook, May 2022

Conditions in China’s property market remain dire, with sales severely limited by lockdowns and other COVID-related restrictions. Sales are still falling by 52% y/y in May according to the 30-city data. Policy overall is becoming more supportive toward the sector, led by multiple local governments and boosted by the recent 15 bps cut to the 5-year loan prime rate (LPR). Critical areas to watch include whether or not financial institutions remain cautious in lending to developers, as well as how fast sales improve after COVID restrictions are eased.

Posted May 31, 2022
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Searching for the Least Rotten Apples

A survey of property developers’ annual results from 2021 reveals the first total decline in interest-bearing debt within the sector on record. Servicing this debt has become more difficult given developers’ declining cash positions, and rising proportions of cash held in escrow accounts. In general, financial institutions continue to shun property developers, despite authorities’ guidance to maintain credit lines. In 2022, most participants in the land market are state-owned firms, with a few notable private names still active.

Posted May 23, 2022
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