Beijing has been urged to take further action to ensure a soft landing for China’s economically important property sector, as the country focuses on preventing debt shocks, restoring market confidence and meeting its annual economic growth target.
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At a forum held by Renmin University on Wednesday, policy advisers and economists joined the chorus of those calling for attention to be paid to weak links such as developers’ tax burdens, the control of home supply, the supply of rural land and concerns about the prospects of a property tax.
“Policy adjustments are needed to mitigate the impact of real estate debt shocks … to prevent a surge in bad debt from squeezing liquidity in the real economy and pushing the overall economy into recession,” Wang Xiaolu, deputy director of the Beijing-based National Economic Research Institute, said at the forum.
In particular, he warned that the market needs to clear out bad debts and see home prices return to a reasonable level, cautioning against a prolonged period of economic stagnation similar to the one seen after Japan’s real estate bubble burst in the 1990s.
Wang’s comments were echoed by other economists at the forum, signalling that property policy must remain high on the government’s agenda if it wants to achieve its targeted gross domestic product growth of “around 5 per cent” this year.
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At a news conference last month, China’s housing ministry vowed to add one million units to its urban village reconstruction list and also pledged to double credit to white-listed property projects to around 4 trillion yuan (US$558.33 billion) by the end of the year.