China’s economy is slowing to the lows seen way back in 1990 — a price President Xi Jinping seems willing to pay to reduce the country's dependence on its property sector.
Beijing’s squeeze on real estate will linger into next year and beyond, a development many hadn’t seen coming and that has now prompted banks like Goldman Sachs Group Inc., Nomura Holdings Inc. and Barclays PLC to cut their growth forecasts in 2022 to below 5%. Bar last year’s pandemic year, that would be the weakest in more than three decades.
It’s a big step down from pre-pandemic rates closer to 7%. Given China’s status as the world’s second-biggest economy, it means softer demand for commodities pumped out by countries like Australia and Indonesia, and slower spending by Chinese consumers who are crucial to multinationals from Apple Inc. to Volkswagen AG.