International Monetary Fund official Zhu Min said China will avoid an economic hard-landing even as government data showed property prices falling in most of the nation’s biggest cities.
“China’s heading for a soft-landing,” Zhu, a deputy managing director at the IMF, said at a conference in Hong Kong Monday, adding that the pace of investment remained strong even after slowing. Prices of new apartments fell in 45 of 70 cities in February from January, the statistics bureau said Sunday.
Premier Wen Jiabao has prolonged a crackdown on real-estate speculation to reduce the risk of asset-price bubbles and make housing affordable, telling lawmakers this month that prices remain far from “reasonable.” Zhu’s comments contrast with JPMorgan Chase & Co. strategist Adrian Mowat saying last week that weakness in car sales and cement and steel production indicate the nation is already experiencing “a hard landing.”
Chinese stocks fell on the property data, with the Shanghai Composite Index down 0.3 percent as of the 11:30 a.m. local time break in trading.
Zhu, a former deputy governor of China’s central bank, echoed IMF head Christine Lagarde in highlighting risks to the global economy even as he acknowledged signs of improvement. Europe’s financial markets are “very fragile” and while emerging market growth is strong, it’s “weaker than expected,” he said. The world expansion is slowing, he added.
In Beijing Sunday, Lagarde cautioned policy makers against a false sense of security as the world economy stabilizes, highlighting elevated oil prices, debt levels in developed nations and the risk of slowing growth in emerging markets.
Elsewhere in Asia, South Korea Monday reported that department store sales rebounded last month, while Hong Kong may say unemployment climbed in February, according to a Bloomberg News survey of economists.
Italy may say industrial orders fell in January from the previous month, a Bloomberg survey showed. The European Central Bank will release euro-zone current account figures for January, while the European Union’s statistics office will report the region’s construction output for the same month.
In the U.S., the National Association of Home Builders/Wells Fargo may say its index of builder confidence rose for a sixth straight month to 30 in March, from 29 in February, according to the median estimate in a Bloomberg survey. In China, a two-year campaign to rein in property prices has included measures such as higher down payments and mortgage rates, and purchase restrictions. A government program to build millions of low-cost homes may help to counter the drag on economic growth.
New home prices fell in 27 of 70 cities last month from a year earlier and prices were unchanged in six cities, the national statistics bureau said in a statement on its website Sunday.
“China’s home prices fell further, but it doesn’t mean there will be a policy loosening any time soon,” said Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc. “The government is not worried too much about the impact of a slowing property market on economic growth because investment in social housing will still be big.”
Among major cities, home prices in both Beijing and the financial center of Shanghai fell 0.4 percent last month from a year ago. In the south, Shenzhen declined 0.2 percent, while Guangzhou rose by 0.3 percent from 2011.
“We’re still not sure when is the bottom but we’re sure that we’re still heading for the bottom rather than hitting the bottom,” said Bei Fu, a Hong Kong-based analyst at Standard & Poor’s. “Liquidity is the highest risk Chinese developers are facing.”
Prices have gone up “very substantially” over the past few years and the central government is very determined to control prices to maintain social stability, said Fu.
