China’s property sector is continuing its yearslong crisis, as giant developers risk default and home prices continue to sink, perhaps by more than what official data suggests.
Real estate constitutes about 30% of China’s GDP, making it the single biggest contributor to the world’s second-largest economy.
That makes it the “most important single sector of the global economy,” James McCormack, Fitch’s global head of sovereigns, told Bloomberg TV in a Thursday interview.
“There’s a structural change underway; it is not going to be the growth driver of the Chinese economy the way it has been in the past,” he continued.
Yet China is unlikely to step in and provide “massive support to property developers,” McCormack predicted, given Beijing’s previous wish to lower debt in the real estate sector and reduce property’s overall importance to the economy.
The decline of real estate was not “unintended,” McCormack believes, even though the “spillovers