China needs a narrative that house prices are going to rise, Nomura's Koo says
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China needs to convince people that home prices are on their way up in order for economic activity to pick up, according to Richard Koo, chief economist at Nomura Research Institute. Koo stated that for people to come back and borrow money, there needs to be a narrative that says the bottom of the prices has been reached and prices will start going up. However, it is not clear whether prices have reached an actual bottom yet. Koo also mentioned that Chinese officials have said that real estate remains in a period of 'adjustment' and that the country has been emphasizing other sectors such as manufacturing and new energy vehicles. China's economy officially grew by 5.2% in 2023, and Beijing has set a target of around 5% growth for 2024. Chinese authorities have been reluctant to embark on large-scale support for the economy due to the view that its prior stimulus program was a failure. Koo believes that China should stimulate its economy to avoid a balance sheet recession and cut that support once growth reaches 12%.

#China #HousingMarket #EconomicGrowth #StimulusProgram #BalanceSheetRecession

https://www.cnbc.com/2024/04/10/nomuras-koo-china-needs-a-narrative-that-house-prices-are-going-to-rise.html