[China Two Sessions] No Signal for 'Real Estate Deregulation'... "Preventing Disorderly Expansion"

China has indicated that it will focus on risk management rather than drastic deregulation of the real estate market this year.

Li Keqiang, Premier of the State Council of China, stated in his work report at the opening ceremony of the National People's Congress (NPC) held at the Great Hall of the People in Beijing on the 5th, regarding the real estate industry, "Efforts must be made to prevent disorderly expansion of the real estate market to promote stable development." He also added, "We will effectively prevent and mitigate risks of real estate companies and improve their asset and debt situations."

[Image source=Yonhap News]

The real estate sector is estimated to account for about 15-25% of China's Gross Domestic Product (GDP). The market had expected this year a relaxation of regulations on the real estate market to spur full-scale economic growth and expanded comprehensive support for companies facing debt problems.

There is also analysis that the conservative growth target of around 5% set by the Chinese government, which falls short of market expectations, reflects the leadership's concerns about pressure on the real estate market. Bloomberg reported on the 5th, "The modest growth target of about 5% signals that the country's top leadership remains concerned about the recovery, considering weak consumer confidence, declining exports, and continued pressure on the housing market."