China Vows to Strengthen Efforts to Stabilise Housing, Equity Markets
Real Estate

China Vows to Strengthen Efforts to Stabilise Housing, Equity Markets

China's regulators have pledged to intensify efforts to stabilise the housing and equity markets, as well as implement more effective fiscal policies, following a meeting of top leaders who called for greater stimulus.

The government aims to promote the recovery of the property market through measures such as increasing demand and controlling the supply of land for new development. Dong Jianguo, a vice minister at the housing ministry, made this statement during a conference on Saturday, as reported by China News Service.

The China Securities Regulatory Commission announced that it will enhance market monitoring for futures and spot trading and strengthen supervision of margin trading, derivatives, and quantitative trading, according to a statement on its website.

The Ministry of Finance stated that it will introduce more effective and sustained fiscal policies next year and improve macroeconomic regulations. The government will also increase the issuance and usage of local government special bonds, expanding their investment areas, as per the statement. These comments followed a two-day Central Economic Work Conference in Beijing, where officials, led by President Xi Jinping, vowed to raise the fiscal deficit target next year. For only the second time in at least a decade, officials made "lifting consumption vigorously" and stimulating overall domestic demand their top priority.

Although China's struggling economy has shown modest recovery in recent weeks, supported by more government initiatives with signs of improvement in consumption and factory activity, overall confidence remains fragile. This is because policies have not been robust enough to lift the economy out of deflation. In a sign of the challenges facing policymakers, China's credit expansion unexpectedly slowed in November. According to figures released, loans extended to the real economy, excluding those to financial institutions, fell to the lowest for November since 2009. This decline, coupled with elevated government bond issuance, has slowed overall credit growth.

Further easing is expected, with China planning to cut interest rates and the reserve requirement ratio in a timely manner next year, as reported by the 21st Century Business Herald on Saturday, citing Wang Xin, director of the research bureau under the People's Bank of China. Wang also mentioned that the central bank would increase the intensity of monetary and credit supply. He stated that financing conditions for the real economy would be further relaxed. These remarks followed a pledge by the Politburo to embrace a "moderately loose" monetary policy in 2025.

The anticipation of further easing has sparked a rush of funds into government bonds. On Friday, the yield on China's 10-year bonds dropped to a record low of 1.77 per cent, with longer-tenor yields also declining. In contrast, the CSI 300 Index of stocks fell by 2.4 per cent, marking its worst drop in three weeks.

The central bank will also focus on improving the management of exchange rate expectations and guarding against potential shocks next year, according to a senior official.

China's regulators have pledged to intensify efforts to stabilise the housing and equity markets, as well as implement more effective fiscal policies, following a meeting of top leaders who called for greater stimulus. The government aims to promote the recovery of the property market through measures such as increasing demand and controlling the supply of land for new development. Dong Jianguo, a vice minister at the housing ministry, made this statement during a conference on Saturday, as reported by China News Service. The China Securities Regulatory Commission announced that it will enhance market monitoring for futures and spot trading and strengthen supervision of margin trading, derivatives, and quantitative trading, according to a statement on its website. The Ministry of Finance stated that it will introduce more effective and sustained fiscal policies next year and improve macroeconomic regulations. The government will also increase the issuance and usage of local government special bonds, expanding their investment areas, as per the statement. These comments followed a two-day Central Economic Work Conference in Beijing, where officials, led by President Xi Jinping, vowed to raise the fiscal deficit target next year. For only the second time in at least a decade, officials made lifting consumption vigorously and stimulating overall domestic demand their top priority. Although China's struggling economy has shown modest recovery in recent weeks, supported by more government initiatives with signs of improvement in consumption and factory activity, overall confidence remains fragile. This is because policies have not been robust enough to lift the economy out of deflation. In a sign of the challenges facing policymakers, China's credit expansion unexpectedly slowed in November. According to figures released, loans extended to the real economy, excluding those to financial institutions, fell to the lowest for November since 2009. This decline, coupled with elevated government bond issuance, has slowed overall credit growth. Further easing is expected, with China planning to cut interest rates and the reserve requirement ratio in a timely manner next year, as reported by the 21st Century Business Herald on Saturday, citing Wang Xin, director of the research bureau under the People's Bank of China. Wang also mentioned that the central bank would increase the intensity of monetary and credit supply. He stated that financing conditions for the real economy would be further relaxed. These remarks followed a pledge by the Politburo to embrace a moderately loose monetary policy in 2025. The anticipation of further easing has sparked a rush of funds into government bonds. On Friday, the yield on China's 10-year bonds dropped to a record low of 1.77 per cent, with longer-tenor yields also declining. In contrast, the CSI 300 Index of stocks fell by 2.4 per cent, marking its worst drop in three weeks. The central bank will also focus on improving the management of exchange rate expectations and guarding against potential shocks next year, according to a senior official.

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