Signs point to potential recovery in China's economic downturn?
China's Ongoing Property Market Recovery Struggles Amidst Economic Uncertainty
China's property market recovery, as of mid-2025, remains tentative and uneven, with continued declines in property prices and the government's stimulus efforts yet to produce full stabilization [1][2][3]. The real estate sector entered a historic crisis in 2022, marked by sharply falling home prices and developer debt issues, making it the worst downturn since the market's commercialization in the late 1990s [2].
In an attempt to revive the sector, the Chinese government has rolled out a $1.12 trillion stimulus package in 2025, including interest rate cuts, reduced mortgage down payments, and a CNY 4 trillion loan program aimed at completing stalled projects and purchasing unsold inventory [1][3]. Local measures such as easing purchase restrictions in suburbs have also been implemented, although tighter rules remain in central areas [1].
However, the implementation of these stimulus measures remains uneven, and the pace of recovery is slow. Economist UBS revised its earlier forecast, now expecting housing prices in top-tier cities to stabilize only by mid-to-late 2026 unless further stimulus is introduced [4]. The fragility of the housing sector means further contraction in home sales and housing starts will likely persist, prolonging economic headwinds [2].
The real estate downturn has been a major drag on China's economic momentum, affecting sentiment, investment, and consumption broadly [2][5]. July 2025 data showed a marked slowdown in economic activity after a relatively strong first half, emphasizing that continued policy support is crucial to reach the government’s ~5% growth target for the year [5].
China’s property market issues contribute to broader concerns about stability in the world’s second-largest economy, affecting global growth forecasts given China’s central role in global trade and commodity demand [2][3]. Delays in China’s property recovery can ripple through global supply chains, commodity markets, and international financial markets, increasing uncertainty for investors and trading partners worldwide [3].
In response to faltering domestic demand, Chinese policymakers launched two interest subsidy programs in August 2025 aimed at stimulating household consumption and supporting service-sector businesses. The first interest subsidy program offers a 1 percentage point fiscal subsidy for consumer loans taken between September 2025 and August 2026 [1].
Meanwhile, the US-China trade relationship remains tense, with US Treasury Secretary Scott Bessent discussing the possibility of imposing 200% tariffs on China over its continued purchases of Russian crude oil during the most recent G7 summit in Canada [6]. Economist Helen Qiao expects an upside risk to the existing 10% of reciprocal tariff rate to China [6].
Despite these challenges, China's economy continues to grow, with real GDP rising from $18.2 trillion in 2021 to $18.7 trillion by the end of 2024, while the US economy surged from $23.7 trillion to $29.2 trillion in the same period [7]. However, China's growth rate has stabilized around 5% annual growth, far below the near-7% average posted in the five years preceding the pandemic [7].
In conclusion, China’s property market recovery remains fragile and protracted in 2025, with substantial stimulus deployed but yet to fully reverse price declines or stabilize the sector, leaving significant implications for the domestic economy and global markets as Beijing continues balancing growth objectives and market stability challenges [1][2][3][4][5].
- The fragile recovery of China's property market could have far-reaching consequences, as it may impact various aspects of the business world, such as investment decisions made by finance institutions and the general news covering international trade.
- The intertwined nature of China's property market recovery, politics, and economics indicates that developments in one area can have significant implications for the others, including the broader business sector and global financial news.
