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Imf Predicts Soft Landing For China

News Posted On: 22 March 2012

According to the IMF, China will avoid a hard economic landing, even though latest government figures show property prices are falling in most of the large cities.

Figures from the statistics bureau show prices of new apartments dropped in 45 out of 70 cities in February compared to January. Prices of new homes dropped in 27 out of 70 cities last month compared to a year earlier, and prices remained unchanged in six cities.

In spite of these falls the Premier Wen Jiabao is determined to continue his crackdown on property speculation, and still feels that housing prices are unaffordable for many. The campaign to bring down prices has been on-going for two years, and includes measures such as purchase restrictions, higher deposits and higher mortgage rates.

The latest signs show that the Chinese economy is slowing, as new car sales and cement and steel production are weaker. It's hoped the government program to build millions of low-cost homes could help to counteract this slower growth. Because of the need to build so many low-cost homes the government isn't really worried about the impact a slowing property market could have on economic growth.

The price falls are hardly large, as property prices in Beijing and Shanghai fell by just 0.4% in February compared to February 2011, while prices in Shenzhen fell by just 0.2%. Property prices in Guangzhou rose by 0.3% compared to a year earlier.

It is anticipated the price falls will continue, and no one is quite sure when this soft landing will happen. Some feel the problem might not be falling property prices, but rather liquidity amongst Chinese developers who are no longer able to obtain credit.

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