The Beijing data blackout raising alarm bells about China’s economy

Telegraph - On the last day of November, two of the most drably named agencies in China were thrust into the spotlight.

China Real Estate Information (CREI) and the China Index Academy are private data agencies, and both release monthly readouts on home sales made by the country’s top 100 developers.

Their numbers come out well before official stats are released. So for investors wanting a glimpse into China’s painful, four-year property slump, the agencies are the go-to.

Interest was particularly acute last month on the back of troubled property giant China Vanke revealing it was asking bondholders for more time to repay a chunky 2bn yuan (£212m) debt that matures mid-December.

But the data for November never appeared. China’s property market suddenly went dark.

Bloomberg later reported that Beijing had told the two private sector agencies to withhold the numbers until further notice.

Clients who paid for the reports could reportedly still get them but would be required to keep the data confidential.

The reports were unlikely to have contained good news. CREI’s October reading showed a 42pc slump in sales from a year earlier – the sharpest decline for 18 months.

President Xi Jinping’s administration actually engineered the 2021 property slump, hoping to shift lending and investment away from developers and into more productive sectors. But the CREI numbers suggest Beijing has been perhaps a bit too successful.

Now the authorities are standing confusedly at an economic policy crossroads, apparently hoping that if they hide the signposts then nobody will notice.

“Resorting to data suppression suggests officials are running out of viable policy levers and are now managing optics instead of fundamentals,” said a note from US-based China intelligence firm Trivium.

This isn’t the first time Beijing has switched off the lights. Figures on land sales, foreign investment, business confidence and urban unemployment have all been suppressed in recent years.

But the latest act of data censorship comes as more and more Chinese economic numbers are flashing amber.

Consumer confidence is in a trough, as are retail sales. The youth unemployment rate is stuck above 17pc.

The economic health indicators known as PMIs are hovering in contraction territory. Investment is wilting, especially in the private sector.

Although exports have weathered US president Donald Trump’s tariffs better than expected, Beijing’s target of pumping up GDP by 5pc this year looks decidedly optimistic.

“In the broader economy, there isn’t a load of reasons to be positive,” says Leah Fahy, of Capital Economics. She expects Chinese growth to slow to 3pc next year and just 2pc by 2030.

The Chinese Communist Party top brass is holding two critical conclaves this month – a monthly Politburo meeting that took place on Monday and an annual Central Economic Work Conference this Friday – to refine their growth targets and figure out how to meet them.

They will surely also have to weigh up the crisis at Vanke.

The company asked bondholders late last week to delay repayment on an even bigger 3.7bn yuan note, raising concerns that Vanke could default on billions owed to offshore creditors and big Chinese banks.

Another major corporate crisis in the property sector would be a headache for Beijing. It could leave investors questioning whether the authorities have a sure enough grip on the economic levers.

But it also signals that the country’s debilitating property slump, which began with the collapse of the $50bn (£37.5bn) developer Evergrande in 2021, may still have some way to run.

As long as that slump lingers, China will struggle to revive its economy and alleviate its dependence on exports.

“I don’t think we’ll see a near-term rebound in either property sales or property investment,” says David Zhang, a Washington-based analyst at Trivium.

“Our estimate is that we’re still three to four years from the market really bottoming on a national scale.”

Zhang hails from Handan. Aside from being one of the birthplaces of tai chi, its main claims to fame are steelmaking and the manufacture of nuts and bolts.

It’s a small city by Chinese standards with a population of only 10 million, the size of Greater London. This makes it a so-called “tier three” city.

While the property market has stabilised in the tier one cities of Beijing, Shanghai, Guangzhou and Shenzhen, the second and third tiers remain in the doldrums.

“These cities face the worst housing supply glut and at the same time, they also face continuous population outflow, which is why recovery will take much longer,” says Zhang.

“In some places, we probably won’t see the market rebound for five years or more. The property slump is really dealing a heavy blow to cities like mine, both in terms of economic growth and local revenue.”

Land sales are often crucial to local government revenue in smaller cities. With property values 20pc to 40pc below the 2021 peak and sales sluggish, municipal authorities are forced into austerity.

Duncan Wrigley, of Pantheon Macroeconomics, says local governments are using the proceeds of borrowing – which normally go into manufacturing and infrastructure investment – to pay down debt.