China’s Economy Still Sluggish as CCP Proposes “People-Land Linking” Model to Deal with Real Estate Market
The beginning of 2024 has seen China’s economy continue to struggle, with the country’s real estate market facing particularly challenging times. In response to this, the Chinese Communist Party (CCP) has put forward the “people-land linking” model as a solution. However, experts are criticizing this move, stating that it is a reflection of the abnormal model of “unconnectedness between man and land” that has long been adopted by the CCP.
The real estate market in China has been in a state of crisis, with nearly 90% of the top 100 listed real estate companies by market value in 2023 experiencing shrinkage. The number of listed real estate companies with a market value of over RMB 100 billion also continued to decrease to just 7, with their market values falling by almost 30% annually.
The CCP held a national housing and urban-rural construction work conference in late 2023, which outlined the “people-land linkage” model as a priority for 2024. This model emphasizes the close connection between population changes and land development, with the belief that people determine the house and the house determines the land.
However, experts have slammed this approach, with Xie Tian, a professor at the University of South Carolina, describing it as “ridiculous.” He pointed out that in a normal society, the demand for housing arises from the population, and developers respond to this by creating communities and building houses. However, the CCP’s method of building houses first and then creating market demand is a model of dictatorship and wealth plundering.
In addition, Shanghai Oriental Fortune Securities Investment Consulting Co., Ltd. released a report noting that the broader inventory removal cycle in China’s real estate market has reached 51.5 months, signaling a high level of inventory. This is further exacerbated by the fact that the area of existing commercial housing for sale is now enough to accommodate nearly 16.5 million people.
While the CCP has been promoting the “people-land linkage” model, experts remain unconvinced of its effectiveness. Xie Tian stated that the declining population and the continued rigidity of household registration controls demonstrate that the CCP’s slogan of “linking people and land” is ultimately futile.
Looking ahead, experts predict that China’s real estate problems will continue to worsen, with Wang Tao, chief China economist at UBS Investment Bank warning of a potentially deeper adjustment in housing prices and decline in residents’ confidence. As the economic truth becomes hard to hide, it is anticipated that the real estate market will face further challenges in 2024 and beyond.
In conclusion, China’s real estate market remains in deep trouble, with the CCP’s attempts to address the issue through the “people-land linkage” model being met with skepticism from experts. The impacts of this crisis are far-reaching, affecting not only the housing market but also industries such as finance, placing significant pressure on China’s economy as a whole.