People’s Republic of China: Selected Issues

IMF Staff Country Reports, February 9, 2024

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Bibliographic details

• Published: February 9, 2024
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400266966.002

Overview and central findings

• The Selected Issues paper analyses China’s property sector transition.
• The Chinese authorities have taken resolute actions to address the risks from the property sector since the start of the pandemic.
• The key challenge is to smooth the transition of the sector to a smaller, more sustainable size amid:
  • unresolved financial distress among developers;
  • weakened homebuyer confidence;
  • a backdrop of large inventories and structurally declining demand.
• New housing construction is set to fall significantly in the coming decade.
• Drivers of the projected decline in construction:
  • a likely slowdown in urban household formation;
  • reduced urban redevelopment activities;
  • an expected gradual contraction in the overall population;
  • a significant drag from excess developer inventories and rising secondary market supply of previously vacant homes.

Projections and analysis

• The paper projects the path of real estate investment in China over the medium term.
• Construction faces substantial downward pressures from both demand-side and supply-side factors (see Overview and central findings).
• Excess developer inventories and increasing supply on the secondary market of previously vacant homes act as a significant drag on new construction activity.

Policy priorities and recommendations

• Expedite the resolution of underlying supply-side imbalances, most importantly by restructuring nonviable developers.
• Support and de-risk surviving developers to preserve market functioning and complete viable projects.
• Take steps to contain the build-up of risks in the property market to prevent further financial distress and transmission to the broader economy.
• The paper considers policies that will help ease the sector’s transition to a smaller, more sustainable size.

Publication metadata and topics

• Publication date: February 9, 2024
• Pages: 58
• Volume: 2024
• Issue: 050
• Series: Country Report No. 2024/050
• DOI: https://doi.org/10.5089/9798400266966.002
• Stock No: 1CHNEA2024002
• ISBN: 9798400266966
• ISSN: 1934-7685
• Subject tags: Financial statements, Housing, International organization, Monetary policy, National accounts, Personal income tax, Public financial management (PFM), Revenue administration, Tax incentives, Taxes
• Keywords: Asia and Pacific, Financial statements, Global, Housing, labor income taxation, LG debt, LG finance, Personal income tax, real estate slump, Tax incentives, wealth taxation

Source: People’s Republic of China: Selected Issues (IMF Staff Country Report No. 2024/050).

Content in this bundle

• People’s Republic of China: Selected Issues; IMF Country Report No. 24/50; December 19, 2023
  • People’s Republic of China: Selected Issues; IMF Country Report No. 24/50; December 19, 2023 (Markdown version)
  • People’s Republic of China: Selected Issues; IMF Country Report No. 24/50; December 19, 2023 (PDF)