BEIJING, March 25. /TASS/. Several problems in the real estate sector in China will have a negative impact on the country's economic growth in the coming years, Peter Jungen, German economist, chairman of the investment company Peter Jungen Holding GmbH, told TASS.
"Problems in the real estate sector will reduce the pace of economic growth," said the expert who took part in the China Development Forum in Beijing.
He pointed out that in recent years, a significant portion of economic growth has come from the real estate sector.
"In the coming years, there will be very little investment in new housing, and this will affect economic growth," the expert said.
"There is significant excess capacity in China's real estate sector, which has resulted in many buildings sitting empty and unused," Jungen said. Given the declining population, the real estate sector is likely to struggle for several years to come, the economist said.
Jungen noted that some Chinese bought housing as an investment in order to have income in retirement. According to him, the problems in the real estate sector were causing some unrest among the population, who believed that the sector was supported by the government and was therefore the right way to invest money.
In early March, a report by the Chinese government was published at the annual parliamentary session. It notes that the government will adhere to the policy of "simultaneously solving both superficial and deep-seated problems."
In particular, it is planned to eliminate risks associated with the real estate sector and debt obligations of local governments. At a press conference on the sidelines of the session, the head of the Ministry of Housing, Urban and Rural Construction of the People's Republic of China, Ni Hong, said that the goal of stabilizing the Chinese real estate market still remains elusive. He pointed out that developers experiencing problems with liquidity and debt repayment must, in accordance with the law, go through bankruptcy and restructuring procedures.
In 2023, investment in real estate decreased by 9.6%, to 11 trillion yuan ($1.5 trillion). Sales fell 6% to 11.7 trillion yuan ($1.6 trillion). Developers reduced the volume of construction of new buildings - by 20.4%, to 953.8 mln square meters. The volume of unsold real estate increased by 19%, to 672.9 mln square meters.
About the forum
The China Development Forum was held in Beijing on March 24-25. It was attended by representatives of the Chinese government, international organizations, large companies from China and other countries, in particular the USA and European countries, as well as economists and experts from other fields. The forum is an important platform for the exchange of ideas and opinions between Chinese and foreign political and business circles.