What’s going on in China?

A brief explanation of recent economic changes in the world’s biggest nation, and what they mean for you

China is no longer just a looming backdrop to the Aussie economy. The performance of the world’s largest economy matters directly to the many brokers here who deal mainly with Chinese clients, and those brokerages, such as AMA-winning Alliance Mortgage Solutions, who outsource processing to China.

New research by NAB Group Economics and CommSec report a slowdown in Chinese economy, which we’ve summarised here:
 

China’s growth is slowing…to a sprint

Year on year GDP growth is at a five-year low, at 7.3% in the September quarter. That’s still an very high level of growth; Australia’s GDP grew 3.1% in the year to June according to the Australian Bureau of statistics. China’s growth is sufficiently high, NAB argues, that the authorities there are unlikely to take any stimulus action.
 

China’s property market is actually slowing down

Chinese investors in Sydney aren’t just there for harbour views; the Chinese property market is slowing down, and wealthy investors are looking abroad. From August to September real-estate investment (annual) growth in China fell from 11.4% to 10.1%; the amount of residential floor space sold also continued to fall in September. So don’t expect a slowdown in Chinese investors buying over here any time soon.
 

China’s leaders want growth to slow down

As Commsec explains: “the slowdown was engineered by policymakers to ensure that a sustainable level of growth is maintained…they are willing to sacrifice a faster pace of growth in order to correct imbalances across the economy”. They claim to be focusing instead on financial transparency, social and environmental reforms.