One of China’s leading state-owned economics publications has warned against the “superstitious belief” that real estate can continue to serve as a primary driver of the Chinese economy.
The article by Kang Shu (亢舒) entitled “Don’t Superstitiously Believe that Real Estate Drives the Economy” (不要迷信房地产对经济拉动作用) published by Economic Daily points out that the property market cannot be used to boost China’s economy amidst escalating trade tensions with the United States.
“Under current circumstances of higher macro-leverage ratios, hoping that the real estate market can once again bear the key mission of supporting stable growth is no different than slaking one’s thirst with poison,” said the article.
“At present China’s economic performance is changing amidst stability, facing a number of new problems and challenges – in particular marked changes in the external environment.
“Under these conditions, many local authorities have raised the issue of real estate once again. Some people believe that real estate control policies have already been implemented for a considerable period of time, and that the bubble has almost been squeezed out, so we can rest or relent a bit.
“Other people feel that in order to relieve the pressure on economic growth, one immediately effective method would be to resort to the real estate sector.
“These opinions fail to take into account the hidden bubbles and hazards of the real estate market, while continuing to succumb to superstitious belief in and dependence upon the real estate market…[this] will have adverse impacts upon the healthy and stable development of the real estate market.”
The article arrives just following the convening of a real estate work meeting by the Ministry of Housing and Urban-Rural Development (MOHURD) on 7 August, which indicated that Beijing would hold China’s local governments “firmly accountable” for “lacklustre work, major market fluctuations, and inability to achieve adjustment and control targets.”
Since May MOHURD has summoned senior officials from 12 Chinese regions to discuss real state control policies, including Chengdu, Haikou, Taiyuan, Xi’an and Sanya.
MOHURD has further indicated that it will continue to put pressure on companies that drive up housing prices, hoard property or spread false rumours on the real estate market.