The old growth model of steel is difficult to sustain

Now that many types of data are alerting, China’s old growth model seems to have been faltering. In March of this year, cement production dropped by 21% year-on-year, and power generation decreased by 3.7%. In the first quarter, crude steel production fell for the first time in 20 years. These are all the important engines of economic growth in China – the decline in housing investment.

According to data released by the National Bureau of Statistics of China on Wednesday, the growth rate of real estate development investment in China from January to March this year fell to 8.5%, the lowest level since the impact of the global recession in early 2009.

Zhu Haibin, chief China economist at JP Morgan in Hong Kong, said that when talking about China's economic slowdown, everyone actually said that the rapid decline of traditional industries such as real estate and steel, new industries took the burden to take time, the so-called emerging industry up It can only be called a stabilizer. It is still not a new growth engine.

In the first quarter, China’s economic growth rate fell to its lowest level since 2009, putting more pressure on Premier Li Keqiang’s introduction of more pro-growth policies. In view of the loosening of home purchase restriction measures, two interest rate cuts, and a reduction in the bank deposit reserve ratio that failed to revive the real estate market, doubts about whether policy makers can reverse the situation are heating up.

Xu Gao, chief economist at Everbright Securities in Beijing, said that in the past, the Chinese government had only launched a new infrastructure project, and the overall investment would have performed well. But now, increasing infrastructure spending can hardly offset the weak real estate market. To promote growth, China will have to further relax its real estate policy.