Govt purchases may help clear property glut

LI DAOKUI, a member of the 12th National Committee of the Chinese People's Political Consultative Conference and an economics professor at Tsinghua University, has cautioned that policies aimed at clearing the glut of unsold housing, such as zero down payments, may result in a real estate bubble. Instead, he suggests the government purchase unsold houses in third- and fourth-tier cities and rent them to rural residents who intend to live there. Beijing News said this is a good idea:

Against the backdrop of the ongoing annual meetings of the 12th National People's Congress and the 12th National Committee of the CPPCC, many economists including Li have offered their solutions to the supply glut plaguing China's housing market.

As a major economic driver of most modern economies, the real estate industry could deal a heavy blow to a local economy if the housing inventory is not properly dealt with.