According to the CEO of a China-focused research organization, China's Property Sector downturn is affecting economic growth, and it's unclear whether new development drivers will pick up the slack. China recorded a dismal 4.9 percent year-on-year growth in the third quarter on Monday. According to the country's National Bureau of Statistics, the contribution of the real estate sector to the economy has slowed.
Beijing has intensified up measures to rein in excessively indebted property developers as part of a shift away from an investment-led, debt-fueled economic growth model. China, on the other hand, has not made enough headway toward becoming a consumption-led economy. China has remained devoid of structural improvements that could promote spending, such as strengthening the Yuan and expanding the social safety net.
According to Michael Pettis, a finance professor at Peking University in Beijing, the challenges China's property is facing may have an impact on consumer purchasing. According to Pettis, homeownership accounts for roughly 80% of a Chinese's wealth. However, when the Chinese economy slows, consumption will fare better than other investment-driven industries like real estate, according to Pettis.