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A radical shift in China’s property and pandemic policies
Summary
In recent weeks, China has made radical changes to its policies on both the coronavirus and the property market. These changes are intended to ease the burden on businesses and individuals, and to restart growth in the economy. However, it remains to be seen whether these measures will be successful in the long term.
Q&As
What are the two policy fronts that China has been fighting for the past few years?
The two policy fronts that China has been fighting for the past few years are the virulent pandemic and the volatile property market.
What are the 20 steps that the Chinese government has taken in order to relax its stance on the pandemic?
The 20 steps that the Chinese government has taken in order to relax its stance on the pandemic include a reduction in the quarantine time for incoming travellers and an end to the “circuit breaker”, which suspends airlines that inadvertently carried infected passengers. People at two degrees of separation from a covid-carrier (“close contacts of close contacts”) will no longer need to quarantine. And close contacts must now spend a mere five days, rather than seven, in a quarantine facility (plus another three confined to their homes).
What are the 16 measures that the Chinese government has taken in order to revive the property market?
The 16 measures that the Chinese government has taken in order to revive the property market include extending loans for developers, bonds for developers, and guaranteeing new bonds issued by viable developers, including private-sector firms.
How do these measures intend to increase lending to viable developers and construction firms?
These measures intend to increase lending to viable developers and construction firms by instructing banks to be lenient when rescheduling mortgages secured against unfinished flats or owed by individuals thrown into difficulties by covid.
What is the goal of these policy changes?
The goal of these policy changes is to revive growth in the Chinese economy.
AI Comments
👍 China's proactive approach to both the pandemic and the property market is a welcome change. The new policies show a commitment to both saving lives and reviving the economy.
👎 The new policies are a Band-Aid solution that does not address the underlying problems in either the pandemic or the property market.
AI Discussion
Me: It's about how the Chinese government is changing its policies on both the housing market and the coronavirus.
Friend: That's interesting. I didn't know that the Chinese government was having trouble with both of those things.
Me: Yeah, they've been struggling to keep the housing market stable while also trying to contain the virus. But it looks like they're changing their approach to both now.
Friend: I wonder how this will affect the economy.
Me: That's a good question. I'm not sure. But it's definitely a big shift in policy.
Action items
- Follow the Hang Seng China Enterprise index of mainland firms listed in Hong Kong.
- Monitor the index tracking Chinese developers.
- Stay up to date on the latest policy changes in China.
Technical terms
- Zero-covid
- a policy of mass-testing and lockdowns in order to prevent the spread of covid-19
- Close contacts of close contacts
- people who have been in close contact with someone who has been in close contact with a covid-19 positive individual
- Circuit breaker
- a policy that suspends airlines that inadvertently carried infected passengers
- Housing market
- the market for buying and selling houses
- Speculative momentum
- when the housing market is driven by speculation rather than actual need
- Default
- when a borrower is unable to repay a loan
- Bond
- a debt security
- Mortgage
- a loan secured by a property