China's property market has not yet hit bottom despite all the turmoil it has seen over the past year, according to Standard Chartered CEO Bill Winters.
Speaking to CNBC's JP Ong, Winters described the investment environment in China as “challenging,” explaining that consumer confidence and international investor confidence were relatively low.
“We know that the main source of many of the questions about confidence is the property market, and the property market has not yet fully bottomed out, so the decline has been slow,” he added.
“There are some indications from time to time that we are seeing an increase in activity, but at the same time, we don't seem to have really found a real bottom in terms of price,” Winters noted.
The danger, he added, is that a property bubble that bursts in other markets usually heralds a financial crisis, which is usually accompanied by more significant declines in GDP.
China grew 4.7% in the second quarter from a year earlier, down from 5.3% in the first quarter and the lowest since the first quarter of 2023.
Last week, Bank of America cut its forecast for China's GDP growth to 4.8% in 2024 from 5% previously, and lowered its forecast to 4.5% for both 2025 and 2026, from 4.7%.
Beijing has taken several steps to try to stimulate the economy, including cutting loan rates and, most recently, allowing home buyers to refinance their home loans to free up money for consumption.
The reason China has not launched a massive stimulus program, Winters explained, is that the country has seen what other countries did during the first wave of Covid-19, which forced economies into sharply higher debt levels.
“I think we're seeing these small, ongoing stimulus programs, monetary and fiscal policy, that are aimed at making sure we don't get into a really bad spiral that could be difficult to recover from… and our expectation is that the stimulus will be adequate, but not excessive,” he said.
Accordingly, he believes it will be a bit uncomfortable in the short term, but financially, “it will be a good thing.”
Separately, Hao Hong, partner and chief economist at GROW Investment Group, told CNBC's “Street Signs Asia” that there are no signs of strong policy stimulus yet.
While he said he “can only guess” why Beijing has not launched any massive stimulus, he believes China is holding back from providing major policy stimulus because of the structural and circular downward price pressures it faces in the property sector.
