China’s Economy Navigates Turbulent Waters Amid Trade Dispute and Property Recovery
In recent months, China’s economy has endured significant stress due to the ongoing trade war with the United States, marked by stalled negotiations and tariff tensions. Treasury Secretary Scott Bessent recently confirmed that talks have not progressed, while President Trump accused China of violating a preliminary agreement. Despite these challenges, signs indicate resilience within the Chinese economy, with private-sector growth estimates for 2025 remaining robust at 4-5%.
A notable shift is observed in the real estate sector, a critical area once plagued by crisis. A record sale of a home in Shanghai for 270 million yuan ($38 million) has reignited hope among investors that the property market’s steep decline may be nearing its end. Before the crisis, real estate contributed nearly 25% to GDP; that number has now plummeted to 15%. With over 80% of household wealth tied to real estate in 2021, the slump significantly dented consumer confidence.
However, recent data offers optimism: property sales fell by only 3% in early 2025, compared to a staggering 17% in 2024. Moreover, inventory levels in major cities are improving, indicating a potential stabilization in the market. The Chinese government is actively intervening, encouraging local officials to buy up surplus properties, offering home purchase subsidies, and cutting mortgage rates.
While top-tier cities like Shanghai show signs of improving property values, smaller cities like Wenzhou remain vulnerable to price declines, heavily impacted by manufacturing downturns linked to the trade war. Analysts suggest that without continued government support, full recovery could be uneven across different regions. The Communist Party faces the challenge of ensuring that revitalization reaches beyond luxury sectors to benefit a broader population.
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