Thu. Jan 20th, 2022

Advisors to Beijing will recommend a 2022 growth target that is lower than the target set for 2021.

Continued stress in China’s real estate sector is likely to slow the country’s economic growth next year, a government think tank has warned.

The world’s second largest economy is expected to expand by about 8 percent this year, according to the Chinese Academy of Social Sciences’ (CASS) annual blue book on economics, a top government think tank. It warned that the downturn in property was likely to continue and that local government spending would weigh next year.

China’s economy is expected to grow about 5.3 percent in 2022, bringing the average annual growth rate forecast for 2020-2022 to 5.2 percent, CASS said Monday.

Government advisers would recommend that governments set an economic growth target for 2022 lower than the target set for 2021 – or “above 6 percent” – Reuters reported, amid growing winds of a property downturn, weakening exports and tight COVID-19 curbs that hinder consumption.

It encouraged the central government to proactively design a soft landing for the real estate sector, to avoid failed land auctions in large cities and to ward off risks of rapidly falling property prices in smaller cities, the report said.

China’s move to wean property developers away from unbridled lending has led to loan losses for banks and pain in credit markets as builders caught in cash lapse into distress, increasing risks across the economy.

Property behemoth China Evergrande faces one of the country’s biggest defaults, prompting authorities to step in and oversee risk management at the company.

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