Amidst China’s economic recovery after a spike in consumer and business activity early in the year, weak economic data has sparked conversations about the necessity of a boost in fiscal stimulus. Research firm China Beige Book highlighted that while prices in China’s housing market continue to rise, sales have slowed. Therefore, economists suggest that the property sector may be the focus of future stimulus packages. Citi economists suggest that a property-focused package could be introduced as soon as June, with more significant measures being discussed at China’s Politburo meeting in July. Such measures could include mortgage rate cuts, funding support for property developers, and lowering down payment ratios for second-home purchases. Nomura economists aren’t expecting an immediate “bazooka” stimulus package but rather predict that such measures would be introduced in a piecemeal, step-by-step manner. However, China’s policymakers will have to reconcile new stimulative measures with their overreaching guideline that “housing is for living, not for speculation.” Despite potential challenges, most economists agree that the property sector must be prioritized for the recovery of China’s economy.
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