(Bloomberg) — China’s real estate sector shrank at a faster pace in the last three months of last year, and a downturn in the property market continued to weigh on the country’s economy.
Most Read from Bloomberg
China’s real estate GDP contracted 2.9% year-on-year in the fourth quarter, following a 1.6% contraction in the third quarter, according to preliminary accounting results of gross domestic product (GDP) for the fourth quarter and full year of 2021 released by the National Bureau of Statistics on Tuesday. This is the first consecutive contraction in quarterly data since 2008.
Construction GDP also fell by 2.1% over the same period. The two industries together account for 13.8% of the nation’s GDP in 2021, down from 14.5% in 2020, according to Bloomberg calculations.
Despite the government’s efforts to ease some real estate financing restrictions, China’s property market continued to decline in December, with property sales, investment, land sales and financing activities all falling. Real estate investment shrank 14% in December from a year earlier, according to Bloomberg calculations. For the year, it grew 4.4%.
China’s economy grew at its slowest pace in more than a year in the fourth quarter, growing 4 percent from a year earlier, down from 4.9 percent in the third quarter, data released on Monday showed, weighed down by a property slump and weak consumer spending. The growth rate of industrial added value accelerated slightly in December, but the total retail sales of consumer goods slowed down sharply.
Preliminary GDP reconciliations confirmed the weakness in consumption, which was dampened by restrictions imposed to contain the outbreak that has recurred throughout the year. The GDP of the accommodation and restaurant sector grew 4.7% in the fourth quarter, down from 5.7% previously. Weak sentiment is likely to persist for a while, given the spread of omicron variants in some Chinese cities.
Manufacturing growth remained solid, rising 3.1% year-on-year in the fourth quarter, reflecting the limited impact of containment measures on industrial production and strong demand for Chinese goods around the world. Data on Monday showed that the value added of manufacturing accounted for 27.4 percent of GDP last year, up 1.1 percentage points from the previous year.
original title
China’s Property Sector Contraction Worsens in Blow to Economy
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
