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Economists push China to boost housing rescue plan for economic growth

Posted on September 23, 2024 |

Economists suggest that China’s housing rescue plan is crucial for achieving a 5% growth target.

The real estate slump in China has erased $18 trillion in household wealth, causing job losses, weakening consumer confidence, and lowering demand for goods like steel.

Although China introduced a comprehensive housing recovery plan four months ago, progress has been slow, including a 300 billion yuan ($42.5 billion) central bank program to help government-backed firms purchase unsold homes.

China has rejected a $1 trillion proposal from the International Monetary Fund to use central funds to finish incomplete housing projects, citing concerns over cost and risk.

The government is hesitant to extend further support to the housing sector, aiming instead to shift the economy's focus from property to technology and manufacturing.

Authorities are encouraging banks to lend to developers and restart stalled housing projects but are avoiding direct financial involvement.

The real estate downturn is expected to last another five years, posing a continued challenge to China’s economic recovery.

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