Orderly change of gear

IN SPITE OF MOUNTING PRESSURE ON DOMESTIC house prices since late last year, Chinese policymakers have so far resisted the temptation to introduce a massive stimulus to bolster the cooling real estate sector; and for a good reason.

For anxious domestic property developers, the past month was not a good one. In addition to a radical decline in transactions, the average house price in 100 Chinese cities fell by 0.32 percent in May, the first month-on-month drop since June 2012. Falling prices have also aggravated fears of a property meltdown, which would send shock waves through the world's second-largest economy.

However, strengthened manufacturing and non-manufacturing activities in the past month indicate otherwise. If the transformation of the country's growth model is indeed more important than quarterly or yearly growth numbers, it pays to bear the short-term pain of squeezing housing bubbles while pressing ahead with structural adjustment for the country's long-term gain.