Chinese economy impacted by debt issues of property developers
Real Estate

Chinese economy impacted by debt issues of property developers

Debt issues at a major Chinese property developer have now started affecting the country’s steel sector and began to ripple through to other vital parts of the world's second-largest economy.

The spreading balance-sheet crisis at real estate companies is a warning for policymakers as a change in the fortunes of the steel sector would have notable repercussions for China's economy, with glass, cement and household appliances all vulnerable to demand drops.

Steel costs have decreased from their record highs seen earlier in 2021 due to easing demand from development activities, which account for more than half of the metal's consumption, while steelmakers' share costs have also been impacted.

Steel's acute sensitivity to the ebbs and flows in development and manufacturing makes it a closely-tracked bellwether for China's economy, which has begun to slow down from the second quarter. Steel companies are huge employers that help an extended supply chain. Hitting steel works, real estate developers have dialled back investment in projects to save cash in a sector packed by tighter borrowing rules that have engulfed indebted firms, most notably China Evergrande Group. They usually stockpile steel products in winter at relatively lower costs and sell them after the new year holidays when consumption resumes.

In the final quarter of 2021, the real estate market took a further hit as the unease in the sector shook already weak buyer sentiment, with unsold residential stock in China's 100 biggest cities touching a five-year high in November.

Demand for houses is likely to ease further in 2022, hitting downstream producers of household products. Cement manufacturing, another construction material, decreased by about 16% for September-November year-on-year and was lower versus the same time between 2017 and 2019.

Image Source

Redefine the future of urban mobility! Join us at the Metro Rail Conference 2025 to explore groundbreaking ideas and insights. 👉 Register today!

Debt issues at a major Chinese property developer have now started affecting the country’s steel sector and began to ripple through to other vital parts of the world's second-largest economy. The spreading balance-sheet crisis at real estate companies is a warning for policymakers as a change in the fortunes of the steel sector would have notable repercussions for China's economy, with glass, cement and household appliances all vulnerable to demand drops. Steel costs have decreased from their record highs seen earlier in 2021 due to easing demand from development activities, which account for more than half of the metal's consumption, while steelmakers' share costs have also been impacted. Steel's acute sensitivity to the ebbs and flows in development and manufacturing makes it a closely-tracked bellwether for China's economy, which has begun to slow down from the second quarter. Steel companies are huge employers that help an extended supply chain. Hitting steel works, real estate developers have dialled back investment in projects to save cash in a sector packed by tighter borrowing rules that have engulfed indebted firms, most notably China Evergrande Group. They usually stockpile steel products in winter at relatively lower costs and sell them after the new year holidays when consumption resumes. In the final quarter of 2021, the real estate market took a further hit as the unease in the sector shook already weak buyer sentiment, with unsold residential stock in China's 100 biggest cities touching a five-year high in November. Demand for houses is likely to ease further in 2022, hitting downstream producers of household products. Cement manufacturing, another construction material, decreased by about 16% for September-November year-on-year and was lower versus the same time between 2017 and 2019. Image Source

Next Story
Real Estate

Colliers India Transacts 207,000 sq ft office space at Embassy TechVillage

Embassy Office Parks REIT, India’s first listed REIT and the largest office REIT in Asia by area, announced that it has signed an Agreement to Lease (‘ATL’) with global cyber security company Rubrik at Embassy TechVillage in Bengaluru.Colliers, a leading global diversified professional services company, specialising in commercial real estate services, engineering consultancy and investment management facilitated the transaction for Rubrik.Located on Bengaluru’s Outer Ring Road, Embassy TechVillage is one of Embassy REIT’s flagship office parks which offers world-class office spaces, ..

Next Story
Infrastructure Urban

Ensemble Infrastructure India Appoints Suman Saha as Director of Design

Ensemble Infrastructure India Ltd, a leading workplace design and build fit-out company, has appointed Suman Saha as its new Director of Design. With 25 years of experience in the industry, Suman is recognized for his innovative approach and excellence in design leadership.Working closely with the CEO, Suman’s appointment will enhance the company’s design communication across multiple touchpoints, ensuring smooth collaboration between clients, designers, and execution teams for superior project outcomes. Under his guidance, Ensemble will focus on creating workspaces and design labs that em..

Next Story
Products

Ribbon Vanity by Küche7: Fluid Design Meets Everyday Elegance

Küche7, pioneers in luxury stainless steel kitchens, have unveiled the Ribbon Vanity, a graceful creation that transforms bathroom spaces with its soft, flowing design and understated sophistication. Inspired by the fluid form of a ribbon, this vanity combines smooth finishes, clean lines, and gentle curves, offering a timeless aesthetic that seamlessly complements diverse interior styles.Available in a refined blush pink hue, the Ribbon Vanity effortlessly merges functionality with elegance. With thoughtfully designed storage options, it ensures that bathroom essentials are neatly organised ..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000