Hopes rise for Chinese property support ahead of Two Sessions meeting

BEIJING — Chinese policymakers may be finally warming to the idea of ​​tackling the country’s worsening real estate recession, raising expectations that stronger support measures could come later this year.

Qiushi, the Communist Party’s official newspaper, which means “seeking the truth,” kicked off 2026 with a Jan. 1 article calling for “stronger and more definitive measures” to stabilize real estate market prospects.

Since then, Hang Seng China A Traits Indexincluding developers vanke And SeaIt rose more than 6%, reflecting increased investor optimism at the start of the year.

Ting Lu, Nomura’s chief China economist, said Qiushi’s comment was notable for its scope.

“This is the most comprehensive assessment of China’s real estate markets published. Qiushi since the sector’s collapse in mid-2021,” Ting said in a report earlier this week. “The importance of this should not be underestimated.”

Public Chinese official comments, such as Qiushi articles, are closely watched because they often signal domestic policy debates and potential changes in official thinking before decisions are announced.

The article appeared ahead of China’s annual parliament meeting in March, when top leaders meet to set policy goals for the coming year. At this year’s meeting, full details of the next five-year development plan will also be announced.

“Beijing cannot allow the real estate sector to slide indefinitely, and much more decisive actions are needed to truly stabilize the real estate sector and the overall economy,” Lu said.

“Given rising trade tensions and possibly unsustainable strength in the export sector, Beijing may eventually be forced to significantly increase policy measures.”

China’s real estate crisis has continued despite clear calls from top leaders to halt the sector’s decline in September 2024. New home sales have nearly halved since Beijing began cracking down on developers’ heavy reliance on debt for growth, with floor space sold in 2025 falling to levels seen. in 2009According to a report this week from China Real Estate Information Corp.

Measures taken so far have initially focused on easing some restrictions on buyers to curb speculation.

The Qiushi article called for property policies to be implemented “all at once” rather than a “piecemeal approach”.

Cliff Zhao, chief economist at China Construction Bank International, agrees. He said policy needed to be more ambitious, but targeted support for larger cities could go a long way without too much cost.

He added that details would likely only emerge at the parliamentary meeting in March or later at high-level meetings focusing on urban development.

While official language often frames the real estate collapse as merely a “period of regulation,” Qiushi’s article directly called for urgency, saying policymakers should “shorten the period of regulation as much as possible,” according to a CNBC translation of the Chinese commentary.

In addition, Qiushi disagreed with the view in Beijing that: Stating that real estate is no longer that important for the Chinese economy, he warned that policymakers should be prepared for possible bankruptcies of real estate companies that are still struggling with high debt levels.

vankeS&P Global Ratings, once one of China’s largest real estate companies, was struggling to meet its debt obligations, prompting S&P Global Ratings to take action reduce developer debt. In recent weeks, Vanke narrowly avoided default on a 2 billion yuan ($283 million) onshore bond originally due on Dec. 15, 2025, before receiving an extension.

The outstanding loan balance of Chinese property developers fell in the third quarter from a year ago for the first time in more than a decade, according to official data accessed via Wind Information.

Based on Qiushi’s article, the government is expected to implement more innovative and targeted measures, Michelle Kwok, HSBC’s head of Asian real estate and Hong Kong equity research, wrote in a report published on Thursday.

“The most effective policies are likely to be those that significantly reduce the financial burden on homebuyers,” the report said. “In our view, a greater focus on acquiring excess inventory would be an important step in resolving bottlenecks.”

Chinese developers have been selling flats before they have been completed for a long time, leaving buyers faced with mortgages on unfinished houses. However, without the funds from new sales or the possibility of borrowing, developers also had difficulty completing the construction.

For now, Macquarie’s chief China economist Larry Hu predicts home construction completion rates will fall 12% next year, following a 17% drop last year. It also expects new home sales to decline this year again, with a 7% decline in floor space sold.

Beijing is unlikely to add much support until exports decline, Hu said. [an] AI bust or Fed tightening,” he said in a report this week.

“If so, Beijing will have to rely on domestic stimulus to achieve its growth target,” he said, noting that the “most likely option” would be to support housing.

Nomura’s Lu cautioned that the Qiushi paper does not mean policymakers will take action at every point. He noted that the author was the deputy director of a research center affiliated with the ministry of housing, and “this suggests that these views may not yet have been fully approved at the highest level.”

In contrast, Lu said a Qiushi article published in July that signaled Beijing’s plans to push back against excessive competition used “a forged signature indicating that the comment was fully approved by the leadership.”

This difference suggests that building high-level consensus on ownership support may take time, especially as Beijing continues to prioritize technology competition with the United States.