In China, the stock of mortgage credit continues to decline, reaching the lowest level since the 3rd quarter of 2021 at the end of the second quarter of 2024, according to figures from the Chinese central bank.
This decline indicates that the rate at which households are applying for new mortgages is now lower than the rate at which they are repaying existing loans, a clear sign of households' disaffection with the housing market. However, the latter has been, for years, the preferred market of Chinese households.
The lack of confidence in bricks and bolts is, therefore, fraught with implications for the Chinese economy. The decline in mortgage lending is all the more remarkable as it comes at a time when Chinese interest rates are falling, which should revive the market. There are also questions regarding the timid attempts at stimulus put in place by Beijing, which are insufficient to ensure a rebound in this market and even more so in the Chinese economy.
New ways to stimulate growth are expected
Not accountable to voters, the authorities in Beijing often act more measuredly than those in the West and without any announcements, not hesitating to correct the course afterwards, according to the needs. But in view of the latest figures, they will have to considerably increase their intervention in this market and find new ways to stimulate tentative growth.
While it's evident that China needs to identify new growth engines, the country's potential for development remains vast. This is especially true given its technical expertise in many future sectors and the affordability of its financial assets.
We therefore continue to invest in it as part of all our portfolios.