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China Daily Website

Creating a healthy real estate market

Updated: 2012-06-13 09:48
( chinadaily.com.cn)

Stabilizing policies have been issued by different authorities one by one recently. A series of signals of loosening monetary policies naturally stimulates speculation that the real estate market will once again become the trump card saving the Chinese economy, says an article in Beijing News. Excerpts:

Reportedly, the "economic vacuum" caused by tightening control of the real estate industry is more serious than expected and if the stimulating policies cannot prevent the economy from declining, it is possible the housing market will be assigned an important role.

Compared with industrial structural adjustment and growth model transformation, lifting the control on housing markets can achieve instant effects.

The stagnant economic indicators today are partially due to the tightening policies and macro-control since 2009. The economic condition is still under control. It is necessary to reduce the economic growing speed to reform the national economic structures.

The emerging industries of strategic importance have witnessed remarkable development since 2009 and China's financial revenue, monetary supply and trade statistics are returning to healthy states. The fact proves it is possible for China to transform its economic structure gradually through prudent policy arrangements without driving up housing prices again.

If we only rely on inflating the bubble of real estate to increase GDP, the Chinese economy may return to its costly model of growth.

Past experience indicates we cannot resort to the real estate market any more, otherwise the Chinese economy will soon be driven into an overheated condition with rebounding inflation and a sharp rise in housing prices. It will be the start of another vicious cycle.

China needs a healthy real estate market. The strict control of the housing market should be replaced by flexible measures to not only ensure the healthy development of the industry but also make it a mildly reliable and sustainable contributor to economic growth. But it is totally different from turning it loose.

Translated by Li Yang

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