Fitch Ratings said it expected growth to come in at 8.1 percent this year, compared with a previous 8.4 percent estimate
Ratings agency Fitch on Thursday cut its growth forecast for China’s economy this year citing a slowdown in the country’s property sector, which is also facing headwinds over faltering real estate giant Evergrande.
China enjoyed a swift economic rebound from the pandemic, but strict new rules on the country’s developers have caused a deleveraging rush and helped push housing giant Evergrande to crisis point.
Financial markets have tumbled over fears that the Chinese group could collapse, leading to possible contagion in the world’s second-biggest economy and beyond.
Fitch Ratings said it expected growth to come in at 8.1 percent this year, compared with a previous 8.4 percent estimate, saying the main factor weighing on the outlook is the slowdown in the property sector.
Weakness in the property market comes after a recent regulatory tightening by authorities looking to rein in surging prices and companies’ excessive borrowing.
Beijing has cracked down on developers in a bid to force them to offload debt, introducing its “three red lines” to curb leverage last year.
Housing starts are falling and financial pressures are weighing on real-estate investment, Fitch said in its latest report. Residential investment directly accounts for around 10 percent of GDP and property activity has large spill-overs to other industries.
The property slowdown is also expected to hit emerging markets, taking a toll on global commodity demand.
On Wednesday, Chinese premier Li Keqiang called for efforts to keep the economy running steadily, state media reported.
A State Council meeting he chaired underlined measures to promote consumption, stabilise commodity prices and maintain growth of foreign investment and trade.
Anxious investors were keeping tabs on whether Evergrande makes a payment on an offshore bond due Thursday.
Global markets were roiled earlier this week by worries that the firm did not have enough cash to even service its debts, raising warnings it would default and lead to a possible collapse.
The articles are for information purposes only and Invest for Property shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.
Invest for Property does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.
Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.