中國經濟正在觸底反彈，但還沒有理由歡呼

China's economy is showing signs of improvement, but this isn't necessarily cause for celebration. Last week, Citigroup's Economic Surprise Index, which measures how often economic data surpasses or falls short of expectations, swung back into positive territory for China for the first time since early June. This isn't surprising considering that the data for the third quarter, which was published last week, was stronger than anticipated. The gross domestic product grew at an annualised rate of 4. 9%, exceeding the median estimate of 4. 5%. Retail sales also increased at a faster pace than expected, while data on industrial output and the unemployment rate also surpassed expectations. Investment banks are hastily upgrading their forecasts for full-year growth, which is now much more likely to exceed the government's 5% target. They're also declaring the end of the economic downturn. Nomura, a bank that is typically pessimistic about China, stated that the economy has recently been showing signs of stabilisation. JPMorgan noted that for the first time since April, China's growth returned to an above-trend path and the momentum continued into the current quarter. Interestingly, it stated that a 'bazooka-like policy stimulus', which most investors have been clamouring for, was 'unlikely and undesirable'. Instead, it was crucial to maintain the momentum of policy support. The pace of economic easing has certainly accelerated in recent months. Beijing has introduced a series of measures to counter the downturn in the beleaguered property sector. China's largest cities have reduced minimum down payments for homebuyers, banks have been instructed to lower rates on existing mortgages, and local governments have abolished a requirement that disqualified people who previously had a mortgage, even if it has been fully repaid, from being treated as first-time buyers in major cities. However, a quick look at last quarter's data reveals the extent and severity of the crisis in the real estate market. The value of output in the industry contracted by 2. 7%, marking the eighth quarterly contraction in the past nine quarters. Property investment also fell by 9. 1% in the first nine months of 2023. In September, prices declined at their fastest pace in almost a year, new home sales contracted by 10. 1% in annualised terms, and funding for property development shrank by 18%, according to Nomura. Country Garden, once China's largest developer by sales, missed an interest payment last week on one of its US dollar-denominated bonds, exacerbating the funding pressures on developers. According to JPMorgan, 40 to 45% of the top 100 developers have defaulted on publicly traded debt since the liquidity crunch erupted in the second half of 2021. It's unrealistic to expect any kind of significant recovery when the real estate sector, which is the most important source of household wealth, is collapsing. If any recovery is taking shape, it's an L-shaped one, indicating stabilisation around a low point with no prospect of a return to earlier rates of growth. In a report published on October 15, S&P Global Ratings stated that the good news for China's property developers is that a bottom is in sight. The bad news is that the sector will likely continue to struggle for years. This is the predicament facing the economy as a whole, at least until new growth drivers begin to offset the massive drag from the downturn in property and related industries. The downturn is not just structural, it's also policy-driven. Having turbocharged debt-fuelled investment between 2000 and 2012, a large portion of which went into unproductive real estate, leading to excessive leverage, unsustainable prices, and excess capacity, Beijing had little choice but to allow investment to fall back towards more reasonable levels in an effort to reduce financial risks and increase the share of private consumption in economic output. This rebalancing, however, has been costly, both in terms of economic activity and asset prices. JPMorgan estimates that every 5% change in real estate investment affects overall growth by 0. 6 to 0. 7 percentage points if indirect effects are included. Moreover, despite the succession of easing measures in the housing market, the CSI 300 index of Shanghai and Shenzen-listed stocks has erased all its gains since the reopening rally began in early November 2022. It's unclear how aggressively the government will loosen policy in the property sector and when the ailing industry will stabilise, but a real-estate-induced downshift in China's long-term growth rate is already under way. S&P Global Ratings believes property sales will revert to the 'stable' period in the years following the 2008 global financial crisis, connecting sellers with real buyers. The International Monetary Fund is more alarmist. In its latest survey of China's economy, published in February, it warned that in the absence of reforms to raise productivity and counteract a declining labour force, the diminishing returns of investment-led growth would cause annual output to drop below 4% by 2026. China's economy is finally surpassing expectations, but the fact that expectations were low to begin with and could fall further in the coming months provides little reason for cheer.