China’s property sector slowdown is hitting financial development — and it isn’t clear there are new development drivers to choose up the slack, mentioned the chief govt of a China-focused analysis agency.”The key threat going ahead is that because the social gathering deliberately … deflates the property sector, what’s the development driver that can at the least set a ground on development? No one is aware of but,” Leland Miller, chief govt of the China Beige E book, instructed CNBC’s “Squawk Field Asia” on Tuesday.He was referring to the long-ruling Chinese language Communist Celebration in Beijing.”They hope it is consumption, nevertheless it’s not consumption but,” he added.China on Monday reported a disappointing 4.9% year-on-year development within the third quarter. The nation’s Nationwide Bureau of Statistics mentioned there was a slowdown in the actual property sector’s contribution to the economic system.Beijing has stepped up efforts to rein in closely indebted property builders because it desires to maneuver away from an investment-led and debt-fueled financial development mannequin. That left Evergrande and different Chinese language builders struggling to repay their debt.On the similar time, China has not made sufficient progress to transition to a consumption-led economic system, mentioned Miller. He mentioned structural adjustments that might enhance consumption — comparable to strengthening the forex and rising the social security web — remained absent in China.Learn extra about China from CNBC Professional”Sure you have seen a fall off in funding previously a number of years, however you have not seen consumption decide up. So proper now, it is a purpose nevertheless it’s one which’s not being labored towards — it is no the place close to within the knowledge and I believe it is a main concern going ahead,” mentioned Miller.The newest official knowledge confirmed that fastened asset funding within the first 9 months of 2021 grew 7.3% from a yr in the past — lacking expectations of a 7.9% improve predicted by analysts polled by Reuters.In the meantime, retail gross sales rose 4.4% in September from a yr in the past, beating analysts’ expectations for a 3.3% development.Decrease dwelling costs might harm consumptionChallenges dealing with China’s property sector might weigh on shopper spending, mentioned Michael Pettis, a finance professor at Peking College in Beijing.Residence possession accounts for round 80% of wealth for a median Chinese language, mentioned Pettis.”The explanation we fear quite a bit about consumption is due to housing costs,” the professor instructed CNBC’s “Avenue Indicators Asia” on Tuesday. “If we see a decline in dwelling costs, that can cut back the perceived wealth of households and sometimes, they reply by reducing again on spending and rebuilding their financial savings. And if that have been to occur, that will be dangerous for consumption,” he mentioned.However because the Chinese language economic system slows down, consumption would maintain up higher than different investment-led sectors comparable to property, mentioned Petties.”If China does it proper, consumption will proceed to develop a little bit bit extra slowly however nonetheless fairly solidly,” mentioned the professor.