China vows to fix housing market as Chalmers arrives to learn Australian fallout

Beijing: China’s top leaders have pledged to spend more to steady its free-falling property sector as alarm grows at the country’s flagging economy, as Treasurer Jim Chalmers arrives in Beijing for talks on how it will impact Australia.

Chalmers’s arrival in Beijing on Thursday for two days of meetings, the first visit by an Australian treasurer in seven years, coincided with a flurry of economic activity in China.

Residents walk by a luxury housing construction site in Beijing.Credit: AP

Chinese President Xi Jinping chaired a meeting of the Politburo on Thursday, the country’s highest decision-making body, which vowed to complete the country’s annual economic goals, the official Xinhua News Agency reported.

China will also push for the real estate market “to stop declining,” in what appeared to be the most forceful vow yet to try and stabilise the property market, raising expectations of further stimulus measures which have so far been piecemeal.

The Politburo said the government will strictly control adding more new-home projects and improve outstanding ones, as part of efforts to ease residential oversupply. No specifics were offered by the Politburo on fiscal spending, but the Ministry of Finance is planning to issue 2 trillion yuan ($415 billion) of special sovereign bonds this year, Reuters reported late Thursday citing two people familiar with the matter.

Chalmers has repeatedly stressed that Australia is “not immune” from weakness in the Chinese economy and last month flagged the prospect of $3 billion being wiped from federal coffers if the price of iron ore plummeted faster than expected due to sluggish demand for steel from China’s depressed property sector.

Addressing a meeting of the Australia-China Strategic Economic dialogue on Thursday afternoon Chalmers said the two countries had “complementary economies” and he looked forward to “hearing more about efforts to boost growth in the Chinese economy.”

“As our largest trading partner, we have a deep interest in China’s continued and stable economic growth and a deep interest in finding ways to continue cooperating where we can,” Chalmers said.

He co-chaired the meeting with Zheng Shanjie, chair of China’s National Development and Reform Commission, one of the country’s top economic planning bodies.

They were expected to discuss the state of the Chinese economy and its implications for Australia, investment between the two countries and expanding co-operation in green and low-carbon development, according to the meeting’s agenda.

Jim Chalmers has arrived in Beijing for two days of talks.Credit: Lisa Visentin

China’s economy is on track to miss its annual growth target of 5 per cent, as it grapples with the protracted fallout of its property market collapse, a rapidly ageing population, and floundering consumer confidence, which has put it on the precipice of a deflation spiral.

Until now, Xi has largely ignored calls by economists, both within and outside China, to undertake a large-scale stimulus program aimed at injecting life into the property sector and getting consumers to splash cash in the economy.

“It is necessary to look at the current economic situation comprehensively, objectively and calmly,” the readout said. “Face up to difficulties, strengthen confidence, and effectively enhance the sense of responsibility and urgency to do a good job in economic work.”

Faced with another set of bleak economic figures in August - including new home prices falling at the fastest pace in 9 years, and a youth unemployment rate of 18.8 per cent, a new high this year – China’s central bank this week unveiled its most aggressive package of stimulus measures since the pandemic.

They included lowering borrowing costs, allowing banks to increase their lending, and slashing interest rates on existing mortgages. But many economists have already concluded the moves are too little too late, and a much larger fiscal rescue package is needed to turbocharge consumer confidence.

With Bloomberg

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