What today's China GDP and house prices can tell of the coming storm

The People’s Republic of China posted its GDP figures for the 2023 year this morning, in which the country showed 5.2 percent GDP growth for the full year.

This is the same figure also given by the coutnry’s premier, Li Qiang, at the World Economic Forum currently being held in Davos.

This percentage is up significantly from 2022’s growth of three percent, only marginally behind market expectations of around 5.4 percent, according to the International Monetary Fund (IMF).

Long-term dangers

However, longer-term headwinds remain for the economy, according to Professor Eswar Prasad, in a publication for the IMF:

Trouble at home

In fact, China’s National Bureau of Statistics also posted its year-on-year House Price Index for 2023 this morning. And they were concerning.

The data on China’s house prices showed that property investment fell more than 0.40 percent month-on-month in December – even further than the already steep 3.7 percent drop experienced in November 2023.

This represented the biggest monthly drop in housing prices in several years for the country. It also meant that, once again, real estate prices fell by more than nine percent for the second year in a row, as they had in 2022 when they initially raised alarm bells for the Chinese economy.

Read more: China releases record new yuan loans

What history tells us about today’s figures

As the economists among us will know, the 2008 global financial crisis – which brought America to its knees, and the world’s economy along with it – was preceded by a steep drop in house prices after a years-long real estate boom, largely encouraged by the government.

Many have drawn the comparison, before, between America then and China now. The question is: do today’s figures prove them right?