Capital Intensive China

Knock-on effects of real estate slowdown apparent in related sectors

  • Published 12 Jan 2012

Prices for cement, steel, and glass are all set to decline in 1H12 due to weak demand from a softening real estate sector as government credit restrictions persist.

Government credit restrictions implemented in more than 50 cities in 2011 have helped deflate the gross floor area (GFA) transaction volume by an average 15% YoY among 15 first and second-tier cities tracked by China Confidential (see chart 1). The risks of a property market slowdown have caused much debate among China’s chattering classes and sparked discussion among economists over the impact on banking and public finances. However, the potential repercussions on sectors of the real economy, like cement and steel, have elicited less comment.

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