Property-sector deceleration and its drag on growth

Having relied heavily on real-estate investment and construction as engines of growth for two decades, China's economy began visibly slowing as heavily leveraged developers, most prominently Evergrande, defaulted or neared default starting in 2021, with new-home sales and construction starts falling sharply. Speaking at the Financial Street Forum in November 2022, PBOC Governor Yi Gang acknowledged that the housing market was undergoing adjustments and that the central bank was working with other ministries and local governments to craft policy solutions tailored to local conditions rather than a single nationwide fix, reflecting how uneven the downturn was across cities with different inventory and demand pressures. Yi Gang also noted explicitly that housing is linked to a wide web of upstream and downstream industries, from steel and cement to furnishings and local-government land-sale revenue, meaning the sector's health carries outsized significance for the overall economy well beyond construction activity itself. The episode marked a structural break from the property-led growth model China had relied on since the 2008 stimulus era.