Agencies
Missed payments on investment products by a leading Chinese trust firm and a fall in home prices have added to worries that China's deepening property sector crisis is rapidly stifling what little momentum the economy has left. Zhongrong International Trust Co, which traditionally had sizable real estate exposure, missed payments on dozens of investment products since late last month, a senior official has told investors. China's $3 trillion shadow banking sector is roughly the size of Britain's economy, and concerns about its outsized exposure to property and risks to the wider economy have grown over the past year.
A string of defaults in the shadow banking sector could have a wide ranging chilling effect as many individual investors are exposed to the high yielding trust products. Missed payments could weigh on already fragile consumer confidence in the absence of stronger support measures from Beijing. Barclays was among a number of global banks to cut its forecasts for China's 2023 growth after weak data on Tuesday, citing a faster than expected deterioration in the housing market. It lowered its growth forecast to 4.5 per cent from 4.9 per cent. So far, China has largely managed to avoid a spillover of a debt squeeze in the property sector to the country's $57 trillion financial industry despite a rising number of developers defaulting on repayment obligations.
Adding to the gloom, China's new home prices fell in July for the first time this year, the latest in a string of downbeat data that underlines the urgency for bolder policy support.
