The slump in China’s property market has not yet bottomed out and will continue to be a drag on economic growth, former finance minister Lou Jiwei warned, calling for expansionary fiscal and monetary policies as well as structural reforms to counteract the sector’s persistent headwinds.
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While Lou said real estate is unlikely to be a source of systemic risk – a source of concern after China’s largest developers faced rolling liquidity crises that left many homebuyers without the flats they had paid for – he added the sector will continue to frustrate the country’s growth picture as it undergoes a transformation that could last about five years.
Policymakers have pushed to phase out the industry’s controversial presale system and ensure home deliveries in recent years, but “the pace can be accelerated”, Lou said at the 2025 Caixin Summit in Beijing on Friday.
The downturn in the property market has dampened consumption growth and reinforced deflationary pressures, meaning “expansionary fiscal and monetary policy will be needed for some time”, the former finance minister said.
However, he emphasised that greater output and investment should not be the only target, calling instead for structural reforms, particularly to the hukou – the household registration system that restricts mobility and limits access to public services for rural migrants in cities.
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By linking education, healthcare and pensions to the hukou, the system is widely regarded as a driver of disparities between urban and rural areas.