China’s property crisis could take up to 10 years to resolve, economist censored for bearish views on the economy warns

• Economist Hao Hong told CNBC that China’s real estate crisis could take up to 10 years to resolve.
• Hong, a prominent economist, said there are too many vacant houses in China.
• Hong’s WeChat and Weibo social media accounts were suspended last year after a series of bearish posts about the Chinese economy.

China’s real estate crisis could take up to 10 years to resolve, a prominent economist said on Tuesday.

“Rebuilding the real estate sector could take years or even a decade,” Hao Hong, chief economist at Grow Investment, told CNBC on Tuesday. It’s because we built too much.”

“Also, China’s urbanization process, which has progressed very rapidly over the past decade, is coming to a halt,” Hong said.

The comments from Hong, who is known for his accurate judgment on the Chinese stock market, are important.

His views on China’s struggling real estate market echo those of former Chinese official He Qian, who said over the weekend that China has a population of up to 3 billion people (almost 10 times China’s population). He said there may be enough vacant housing for people to live in. we.

The experts’ comments come amid China’s real estate crisis, which many investors fear will ripple throughout the economy and even beyond its borders.

In effect, Yan Huijia, the billionaire founder of debt-ridden real estate developer China Evergrande, is under police surveillance, Bloomberg reported on Wednesday, citing anonymous sources familiar with the matter. It was reported as a story.

China’s economy is struggling to make a convincing recovery after the coronavirus pandemic subsides, with the second-quarter gross domestic product (GDP) growth rate lower than expected and the youth unemployment rate hitting a record high. There is. The real estate sector, together with related industries, contributes as much as 30% of the country’s GDP.

And experts told Insider that while China is trying to revive its real estate sector by stimulating consumer demand, consumers are looking for new apartments amid record youth unemployment and slowing economic growth. He said that there was little chance of a major upheaval.

“There is no big impact so far,” Hong told Insider on Wednesday, referring to the Chinese government’s economic stimulus package.

China’s real estate investment fell about 19% in August from a year earlier, marking the 18th consecutive month of decline, according to Reuters calculations based on official data released on September 15.

Still, Hong told CNBC that China’s economy could see an upturn if the real estate market problems are resolved.

He told the network: “If people reset their expectations and the economy is restructured towards re-growth from other industries, rather than relying primarily on the real estate sector, it will actually be better than before. “We will have a much healthier Chinese economy.”

Hong’s social media platforms WeChat and Twitter-like Weibo were suspended in late April last year after a series of bearish comments amid a slump in China’s stock market. It’s unclear which of Hong’s posts triggered the suspension, but the Nikkei newspaper said he was making critical comments at the time about China’s intermittent pandemic lockdowns and slowing growth. Other analysts and economists were similarly targeted.

A few days later, he resigned from his position as head of research at the state-run Bank of International Communications. The brokerage said at the time that he resigned for “personal reasons.” He then resurfaced at Shanghai-based investment firm Grow Investment Group in September last year.

Hong’s verified WeChat and Weibo accounts are now back online.

Another expert, former People’s Bank of China adviser Li Daoqui, told Bloomberg on Tuesday that once China’s real estate market recovers, it will return as an important driver of the country’s growth. However, he said the sector’s impact on the overall economy would be “much smaller.”

Evergrande did not immediately respond to Insider’s request for comment.