Monday, November 28, 2011

China economic outlook 2012, Property Risks Overshadow

World Economic outlook - China economic outlook 2012, Property Risks Overshadow : Property risks are "overshadowing" China's economic outlook as a slowdown in sales threatens to trigger developer collapses, the Organization for Economic Cooperation and Development said.

"While the exit of small developers would not pose a problem, the failure of large promoters could put some bank lending at risk, perhaps triggering negative chain reactions," the Paris-based OECD said in a report today. "A key risk is an overly quick liquidation of unsold property."

China's economy, the world's second biggest, will expand 8.5 percent next year even as export growth is pulled down by weak demand and a decline in the nation's competitiveness, the report said. Government housing projects can help to support construction and moderating inflation may allow Premier Wen Jiabao's government to cut interest rates from the middle of 2012, the OECD said.

Vice Premier Li Keqiang said Nov. 25 that the property market is at a "critical stage" and indicated that curbs should be maintained even as sales fall. October housing transactions declined 25 percent from September and prices fell in 33 of 70 cities, according to government data.

Most Chinese builders face delays in payments from developers, Credit Suisse Group AG said previously in a report, citing a survey.

"Individuals have been holding back from purchasing houses and developers carry a rising level of unsold inventory," the OECD said. A property slump could hurt migrant workers relying on construction work and purchasers facing losses, it said.

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