The Chinese Communist Party (CCP) has recently been emphasizing its efforts to “rescue the market.” Today (October 17), the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and three other departments held a joint press conference to promote the stabilization of the real estate market. They proposed the implementation of an additional 1 million units of urban village and dilapidated housing renovations through monetary resettlement, as well as increasing the credit scale for “whitelisted” projects to 4 trillion yuan. Experts question whether these measures are just temporary gestures, and while they appear stronger than previous initiatives, their overall effectiveness will depend on whether the fundamentals of the Chinese economy can rebound. Meanwhile, the stock market reacted by plummeting, especially with real estate stocks experiencing a collective drop.
During the press conference held by the State Council Information Office on October 17, the Minister of Housing and Urban-Rural Development, Ni Hong, the Assistant Minister of Finance, Song Qichao, the Deputy Minister of Natural Resources, Liu Guohong, the Vice President of the People’s Bank of China (PBOC), Tao Ling, and the Deputy Director of the China Banking and Insurance Regulatory Commission, Xiao Yuanqi, were in attendance.
The focus of the conference was the so-called “Four Cancellations, Four Reductions, Two Increases” strategy to rescue the market. However, the first two aspects have already been introduced, including emphasizing granting cities more autonomy in housing market regulation, adjusting or canceling various restrictive measures—mainly including restrictions on purchases, sales, prices, and standard distinctions between ordinary and non-ordinary residences; reducing housing provident fund loan rates by 0.25 percentage points; lowering down payment ratios; unifying the minimum down payment ratios for first and second home loans to 15%; reducing existing loan interest rates; and reducing tax burdens for purchasing new homes by selling old properties.
As for the new content, firstly, 1 million units of urban village and dilapidated housing renovations will be implemented through monetary resettlement. It is claimed that China has 1.7 million units awaiting renovation in 35 major cities alone, with additional renovation demands in other cities. There are still 500,000 dilapidated houses across the country that need renovation. This time, 1 million relatively mature units will be subjected to monetary resettlement.
Secondly, by the end of the year, the credit scale for “whitelisted” projects will be increased to 4 trillion yuan.
According to official sources, as of the 16th, loans approved for real estate projects on the whitelist have reached 2.23 trillion yuan. It is predicted that by the end of this year, the approved loan amount for whitelist projects will exceed 4 trillion yuan.
Xiao Yuanqi, the Deputy Director of the China Banking and Insurance Regulatory Commission, stated that commercial banks entering whitelist projects must fully extend credit and further intensify efforts to submit projects and implement loan disbursements in a timely manner, moderately delegate loan approval authority.
Sun Guoxiang, Associate Professor of International Affairs and Business at Nanhua University in Taiwan, told The Epoch Times that the CCP officially announced the addition of 1 million units for monetary renovation in old areas, but has not yet provided a specific timetable, which may only be a temporary gesture. Regarding the increase in the credit scale for “whitelisted” projects to 4 trillion yuan, with 2.3 trillion already in execution this year, the additional 1.7 trillion falls short in comparison to the overall scale of the Chinese real estate market, estimated at 5 trillion yuan. It appears to have a limited impact, still resembling a drop in the bucket. Therefore, the specific implementation effects of these two measures are still to be observed.
Sun mentioned that this press conference aimed at implementing the CCP Political Bureau’s policy of stabilizing the real estate market to further stabilize market confidence. Despite the government’s previous rollout of various measures like lowering loan rates and easing property purchase restrictions, market responses have remained limited. This newly added credit scale and the shantytown renovation measures may alleviate financial pressures on real estate enterprises to some extent, stimulate market activity, but whether they can effectively reverse the real estate downturn depends on actual market demand recovery and the restoration of long-term confidence.
David Huang, an economics scholar in the United States, noted that from a purely real estate market perspective, the current market rescue measures should be more effective than previous ones. “Putting aside the issue of canceling or not canceling purchase restrictions, first, the reduction in property purchase taxes is significant. Additionally, the introduction of monetary resettlement is crucial. Moreover, the addition of a whitelist is important.”
Huang pointed out that previous measures only removed past policies that suppressed the real estate market and did not provide supportive policies. The current strategy of tax reductions and increased monetary subsidies is on the right path. The increase in credit scale to 4 trillion yuan and the full extension and lowering of loan thresholds, possibly not for low-quality projects, if effectively implemented, will provide broad support to the market. However, uncertainties persist.
“Don’t forget the macroeconomic situation, whether the entire Chinese economy can stabilize in the future. If the economy cannot stabilize, and there is insufficient purchasing power, the impact of these measures will be greatly reduced.”
He mentioned that specific considerations should also include China’s international trade, international relations, the overall economic fundamentals, and the support for private enterprises. Issues such as whether the problem of “state advances and private retreats” has been resolved, whether high taxes have been addressed, and whether social security for the ordinary people has been improved are essential. If any of these factors are missing, the effectiveness of these technical measures will be greatly diminished.
The joint press conference by the five CCP departments has raised concerns about the immediate impact on the volatile Chinese stock market.
From late September to early October, the $9.7 trillion Chinese stock market experienced a rapid cycle of surges and plunges. After the CCP announced stimulus measures by the central bank, the Shanghai and Shenzhen 300 Index surged by 25% within five trading days. However, following the “National Day” holiday, the stock market quickly switched from a brief surge to a steep decline, continuing to be volatile, leading to considerable losses for many new stock investors. During this period, the CCP’s National Development and Reform Commission and the Ministry of Finance each held press conferences pronouncing their determination to rescue the economy, but failed to prevent the stock market from falling back to its levels at the end of September.
After the press conference by the Ministry of Housing and Urban-Rural Development and other five departments on October 17, the Shanghai Composite Index fluctuated below 3200 points, closing down by 1.05%, while the Shenzhen Component Index fell by 0.74%, and the ChiNext Index dropped by 0.32%. Notably, real estate stocks collectively plummeted, with Specialized Service falling by over 10% and Jinke Group hitting the limit-down.