China’s State Council called on cities to introduce policies to ensure the healthy development of their property markets, adding to the chorus of top policymakers stressing the importance of targeted measures for economic growth.
Cities should roll out measures that meet their own needs, a cabinet meeting chaired by Premier Li Qiang decided on Monday, according to China Central Television. While there were no details on those plans, the state broadcaster also reported the meeting discussed the need to optimize policy properties and step up research and construction of a new industry development model.
Chinese authorities have stepped up efforts to stabilize the property market, which along with related industries accounts for about 20% of the economy.
After a short-lived rebound this year, the real estate sector is declining again, stifling the nation’s recovery and fueling expectations for the government to take steps to revive demand. China’s home sales tumbled 33.1% in July, the most in a year as the property crisis continued to weigh on the economy.
Last week, China’s top housing official urged financial regulators and lenders to strengthen efforts to revive the country’s ailing property sector. And the ruling Communist Party’s 24-member Politburo — its top decision-making body led by President Xi Jinping — signaled more support for the real estate sector alongside pledges to boost consumption and resolve local government debt.
Investors are betting that regulators will act swiftly on the Politburo’s promises of support after weeks of disappointment over a lack of execution. That’s boosted by optimism over long-awaited policies targeting the country’s biggest cities — though the impact to the physical market will take time.
The stronger sentiment is helping a push to invigorate capital markets. For foreign investors, continued robust support for the yuan is increasing the attractiveness of Chinese assets and is redirecting stronger flows to equities.
The government still isn’t likely to roll out any large-scale stimulus, as they are mindful of debt risks and over-stimulating the economy. Instead, officials have emphasized the importance of targeted measures — like when the People’s Bank of China last month flagged that real estate policies would be “tailored” to cities.
Beijing has also announced steps to boost consumption as spending growth loses steam and household confidence remains muted. The National Development and Reform Commission — China’s top economic planning agency — on Monday released a wide-ranging policy document focusing on removing government restrictions such as car purchases, along with improving infrastructure and holding promotional events like food festivals.
--With assistance from Kari Lindberg, Rebecca Choong Wilkins and James Mayger.
(Updates with additional details and context.)