China's property sales fell in May for the first time since December 2008, new official data show, but continued growth in construction suggests that government measures to cool the housing market have not yet seriously cut into the nation's economic expansion.
Chinese exports are also performing better than expected, providing continued support to growth even amid the troubles in Europe. Merchandise exports surged 48.5% from a year earlier in May, leading to a rebound in the trade surplus to $19.53 billion for the month, the largest since November. 'Stronger exports are encouraging,' said Royal Bank of Scotland economist Ben Simpfendorfer.
But the real driver of China's growth right now is the property-led investment boom. Figures published Thursday by the National Bureau of Statistics provided the first official indication of how buyers and sellers of property have responded to the new policies the government rolled out in mid-April to address public discontent with high housing prices. Since then, worries about the property sector have pushed down Chinese stock prices, as well as prices of raw materials like copper and steel that are heavily used in construction.
While there was no sign of a major turnaround in prices in May, nationwide sales of property were down 3.4% from a year earlier in terms of floor area, the statistics bureau's figures showed. May's sales volume fell 15.8% from April, the bureau said, and declined 25% in value terms - actually a more modest decline than some earlier estimates by private real-estate research firms.
The government's main objective has been to deter speculative purchase of housing and rein in price rises, and to avoid slamming the brakes on a construction boom that has helped keep the nation's economy humming. Early evidence suggests property developers have not scaled back their building plans: New construction starts in May were double last year's levels, and are up 72.4% so far this year, while developers' purchases of land were also up 44.1% in May.
The Shanghai stock market ended down 0.8% Thursday after the data were released, a sign the figures may not be enough to reassure those worried about the future effects of the government's effort to push down housing prices. Real-estate developer Shanghai Shi Mao Co. on Thursday scrapped a plan to sell new shares, citing the changes in government policy toward the property market.
'I think the market is still too nervous to give a positive assessment of the latest developments,' said Wang Qing, China economist for Morgan Stanley.
He for one is confident that a property slowdown is unlikely to result in a hard landing for the overall economy, as high levels of bank lending are still providing plenty of support for growth. But the Chinese economy has undeniably been cooling in recent months as the government gradually withdraws its stimulus measures.
That's showing up in China's demand for the key commodities and raw materials that have fueled the investment boom. In May, China's imports of copper were down 6.1% from a year earlier, and those of iron ore, the main raw material for making steel, were down 2.9% from a year earlier, figures issued Thursday show. The volume of commodity imports terms is well above levels in 2008, before China launched its massive stimulus program and construction began to rebound, but has come off its peaks.
One risk: Officials are still discussing additional real-estate policies, such as new taxes on high-end properties, that could weigh on sentiment if adopted. And with many property buyers now waiting for sellers to cut prices before buying, there has been little change in the housing-price trend that prompted the government's intervention in April.
The nationwide index of real-estate sales prices, which covers 70 cities, continued to rise 0.2% in May compared to April, and is up 12.4% from a year earlier. Average prices in a few major cities, including Beijing, Hangzhou, Nanjing, Guangzhou and Shenzhen, did decline slightly in May from the previous month, but in all cases the drop was less than 1%.
'While the momentum of property price rises has probably slowed following the tightening measures introduced in mid-April, there is no visible decline in prices yet,' Barclays Capital economist Wensheng Peng said in a report. Prices are likely to decline more in coming months as many new housing projects hit the market, he said.
Reuters深圳一个楼盘的售楼人员在向一对看盘的夫妇介绍楼盘情况中国出口业的表现也好于预期，在欧洲陷入困境之际仍为增长提供着持续的支撑。5月份中国商品出口同比增长48.5%，贸易顺差反弹至195.3亿美元，创下去年11月以来的最大贸易顺差。苏格兰皇家银行(Royal Bank of Scotland)经济学家贝哲民(Ben Simpfendorfer)说，出口的增强是鼓舞人心的。
摩根士丹利(Morgan Stanley) 中国经济学家王庆说，我认为市场仍过于紧张，没能正面评估最近的发展。