The Central Committee of the Communist Party of China made reviving the country’s faltering real estate market one of the key focuses in a policy document made public on Sunday to mark the end of a crucial political gathering.
The third plenary session of the Party’s Central Committee brought together more than 360 of the Party’s top leaders to discuss their long-term policy agenda for the country.
The four-day meeting, chaired by Chinese President Xi Jinping, concluded on July 18, with a resolution on further deepening reform and advancing Chinese modernization published several days later.
The resolution covers the Party’s long-term plans in a wide range of areas, including politics and national security. But economic reforms have been a particular priority, as the Party looks to get the country’s housing market back on track.
China’s real estate sector has taken a hit in recent years, with a debt crunch among developers shaking market confidence and leading to a decline in land and home sales.
To deal with the situation, Party leaders plan to reform the real estate sector by giving municipal governments “greater decision-making powers” to regulate their local markets.
“Based on local conditions, some cities will be permitted to abolish or reduce restrictions on housing purchases and to scrape relevant standards for ordinary and non-ordinary housing,” the resolution states.
In China, the government classifies residential properties as either “ordinary” housing or “non-ordinary” dwellings such as mansions or luxury apartments. These non-ordinary properties are generally subject to higher taxes, down payment thresholds, and stricter loan payment requirements.
Some experts have welcomed the prospect of greater flexibility in real estate policy, saying that it will provide a boost to market demand. “The orientation of real estate work is very clear, which is to address issues that concern the people, such as issues related to home purchases, housing prices, and so on,” Yan Yuejin, research director at the E-House R&D Institute in Shanghai, told Sixth Tone.
Eliminating the division between ordinary and non-ordinary housing would encourage consumers to upgrade their homes due to the reduction in related transaction fees and taxes, said Wang Yeqiang, a researcher at the Chinese Academy of Social Sciences.
Li Yujia, chief researcher at the Guangdong Housing Policy Research Center, told domestic media that empowering municipal governments would increase the efficiency of regulation given the vast disparities in economic conditions among different regions.
“The power of regulation is given to local governments, and so is the responsibility for stabilizing the real estate market,” said Li. “In the current context of urban differentiation, regional differentiation, and diversified buyer demographics, local governments need to have the autonomy to implement city-specific policies to manage the real estate market well.”
Experts speculated that the resolution’s reference to empowering local governments to set housing policy might signal further relaxations in home purchase restrictions previously used to curb speculation.
“This statement is consistent with the adjustments and optimizations to real estate policies introduced in various places this year,” said Yan. “But at the same time, this is also a response to the changing nature of housing demand.”
In the first half of 2024, more than 200 local governments across China introduced a total of 341 policies to stimulate housing demand, according to CRIC, a domestic real estate consulting firm.
Shanghai was one of several cities to relax a raft of housing purchase restrictions, including lowering minimum down payment thresholds, after the People’s Bank of China gave local authorities the power to do so in May.
Aside from housing market reforms, the resolution also focused on reforms to help China adapt to a rapidly aging population, including a pledge to gradually raise the statutory retirement age.
Chinese employees typically retire once they reach the current retirement age, set at 60 for men, and 55 for women in white-collar positions or 50 for female factory workers.
But the resolution’s mention of retirement policy following the “principle of voluntary participation with appropriate flexibility” indicates that workers will be allowed to continue working for longer in future if they are willing to do so.
“This is great news. The current retirement policy does not give workers any choice. ‘Voluntary’ respects individuals’ labor capacity and labor status,” Yang Yansui, a professor of health management at Tsinghua University, told domestic media.
The goals for the next stage of reform outlined in the document are expected to be completed by 2029, the 80th anniversary of the founding of the People’s Republic of China.
(Header image: VCG)
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