China’s runaway property market uppermost in the minds of leaders

The agenda for the Communist Party’s annual plenum next week, expected to feature revamping of decade-old rules of political conduct for party members, will resonate with President Xi Jinping’s (習近平) campaign against official corruption. The meeting also comes amid provincial leadership reshuffles ahead of a top leadership reshuffle at the five-yearly party congress late next year. Momentous though these matters are, looming ever larger is slowing economic growth and a raging property fever, which could yet become the paramount issue of Xi’s leadership. Evidence of that is to be found in expressions of concern from Xi and Premier Li Keqiang (李克強) that quickly found their way down the chain of command through internal channels, prompting as many as 21 cities with strong property price gains to announce cooling measures, such as 70 per cent deposits for second homes.

Xi warned first- and second-tier cities to be alert to property “bubbles”, and Li was worried housing prices would get out of control. Home sales declined in the first two weeks of October, but analysts anticipate limited sustained effect from measures that are extensions of existing ones and do not address basic questions. These include a property tax to dampen speculation, investment alternatives, greater land supply in big cities and more fiscal autonomy for local authorities to reduce dependence on control of land supply and prices to boost revenue.