China hunts for new industrial ‘pillars’ to replace a wobbly property market
- With the property sector, formerly a steady driver of GDP growth, no longer able to deliver, new industries will have to take its place
- But there is no one sector which can be simply swapped into the role – multiple areas, now on the rise, must be combined to carry the same heft
As China’s property sector – once a steadfast contributor to a sizeable chunk of the country’s gross domestic product (GDP) – becomes a less reliable growth driver under a cloud of debt and unfulfilled commitments, Beijing has begun to seek out alternative guarantees for economic stability and dependable patterns of expansion.
However, analysts warned that the world’s second-largest economy is unlikely to find one alternative industry to replace the entire sector in the short term, despite government efforts to elevate certain industries into strategic redoubts.
Some emerging industries such as tech, new energy, advanced manufacturing and biological engineering, have the potential to serve as new economic pillars – but bundled together, they said, not as individual substitutes.
As industrialisation has largely completed, there is a need to establish new pillar industries now
“We need to diversify industries instead of relying on one sector too much,” Chang Haizhong, an executive director at Fitch Bohua, the Chinese subsidiary of Fitch Ratings, said on Tuesday.
However, he added, “it is impossible and unnecessary to find one single replacement for real estate,” as the sector has entered an adjustment period.
Property was first named as a “pillar industry” by the State Council, China’s cabinet, in 2003, five years after Beijing’s decision to privatise housing and boost domestic demand.
Along with the related material, construction, decoration and home appliances sectors, the property market contributed to more than a quarter of national GDP in the 2010s, widely considered its heyday.