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Beijing announced some of its strongest moves yet to revive its debt-ridden real estate sector on Friday, allowing local governments to step in to buy real estate and loosen mortgage regulations when the country This seeks to boost the recovery of the world’s second largest economy.
China’s sluggish property market is at the center of concerns about the economy, with a series of unfinished projects eroding consumer confidence and weakening local government finances. .
Beijing has given the green light to the government to buy some housing projects and turn them into public housing to help deal with falling house prices. They will also be able to buy land from struggling developers.
Analysts have long called for the government to buy up idle housing stock to help restore consumer confidence after years of falling house prices.
Meanwhile, China’s central bank has relaxed real estate lending requirements, lowering the minimum down payment for first-time home buyers from 20% to 15%.
The PBoC said it will also eliminate minimum interest rates on mortgages, allowing provinces to “independently determine minimum commercial personal housing loans for first and second homes.” in every city under their jurisdiction.”
“In cities with high commercial housing inventory, the government may need to consider buying some,” Deputy Prime Minister He Lifeng said on Friday. . . at a reasonable price to be used as low-cost housing.”
The Hang Seng Mainland Properties index in Hong Kong rose 5.3% compared with a 0.9% gain in the benchmark Hang Seng index after the announcement.
These measures come after China’s National Bureau of Statistics released data showing the housing market continued to decline in April, which analysts say is weighing on consumer sentiment. use and slow down China’s economic recovery.
“The downward spiral in the real estate sector worsened in April, with real estate investment and new home sales showing a decline,” Nomura said in a report on NBS data. larger, while real estate prices plummeted.
NBS said real estate prices in cities considered first-class fell 2.5% year-on-year in April.
Chinese economy There have been mixed signs of recovery in recent months, with exports returning to growth in April and some consumption indicators recovering but real estate remaining subdued.
NBS said industrial production rose 6.7% year-on-year in April, beating forecasts of 5.5% from economists polled by Bloomberg and 4.5% growth in March.
However, retail sales rose just 2.3% from a year earlier, well below analysts’ forecasts of 3.7% and down from 3.1% growth in March. .
“China’s April economic report shows that unevenness still exists. Outstanding industrial production. . . while domestic retail sales growth slowed, partly due to fundamental impacts,” HSBC said. “More policy support is needed to support the economy.”
The government is stepping up fiscal stimulus efforts, with the People’s Bank of China selling 1 billion Rmbn (140 billion USD) of ultra-long bonds on Friday. Ahead of the sale, a government adviser said the bonds aim to “fully promote the important role of government investment in promoting economic growth.”
Chinese policymakers are increasingly relying on investment in industry to offset sluggish growth in other sectors and relieve pressure on a weakening real estate market and mounting debt. quality of local government. High-tech industrial production was a bright spot in the data released in April, up 11.3% from a year earlier.
However, this industrial policy is causing trade tensions with the US and EU, China’s most important export markets, which have accused Beijing of pursuing unfair trade practices by causing overcapacity and dumping surplus cheap goods in its market.
Auto production rose 16.3% in April from a year earlier, but sales fell 5.6%, said Lynn Song, chief China economist at ING. He added that consumption growth “is likely to remain moderate” this year “as consumer confidence remains low.”
Meanwhile, fixed-asset investment rose 4.2% year-on-year in the January-April period, below Bloomberg analysts’ poll forecasts for growth. 4.6% and an increase of 4.5% in the period from January to March.
