Dan Wang of Hang Seng Bank says that, in China, deflation will intensify in 2024 and residential home prices will continue to go down.

Income will slow down and people will postpone consumption, as they expect declining prices.  For unskilled labor, it’s relatively easy to get a job.    However, higher skilled jobs are more difficult to find, as these job openings have decreased over the past year according to Ms. Wang, especially, for recent graduates.

The average wage for front line workers at factories she has visited has gone down 10-30%.

“When it comes to housing price, we are far from reaching the bottom,” she says.  Despite all the stimulus from local governments, housing prices are still weak, especially, in big cities such as Beijing and Shanghai.  Meanwhile, the local governments continue to finance new affordable housing developments, not private investors.

The central government is taking over some local government debt and funding some rail projects, but Ms. Wang does not see any large stimulus in the near future, as there is simply no appetite for this from the regulators.