Pictured here is a real estate project under construction in Huai 'an city, Jiangsu province, China, on April 8, 2024.
BEIJING — China needs to convince people that home prices are on their way up in order for economic activity to pick up, Richard Koo, chief economist at Nomura Research Institute, told CNBC's Steve Sedgwick last week.
In other words, as Koo warned last year, China may be entering a "balance sheet recession," similar to what Japan experienced during its economic slump.
"For them to come back and borrow money, we need a narrative that says, okay, this is the bottom of the prices, the prices will start going up from this point onwards," Koo said.
Koo and other analysts have pointed out that in China's policy-driven economy, house prices have not fallen as much as expected given declines in other aspects of the property market.
Persons:
Huai, Richard Koo, CNBC's Steve Sedgwick, Goldman Sachs, Koo, " Koo
Organizations:
Nomura Research Institute, Japan
Locations:
Jiangsu province, China, BEIJING