January 5, 2026, real estate project in Yantai City, Shandong Province, China.
Photo | Future Publishing | Getty Images
BEIJING – Chinese policymakers may finally be open to the idea of tackling the country’s worsening real estate recession, raising hopes that a strong support package could be rolled out later this year.
Communist Party newspaper Qizhi, which means “Search for Truth,” kicked off 2026 with a Jan. 1 article calling for “stronger and more precise measures” to stabilize real estate market expectations.
Since then, the Hang Seng China A Real Estate Index, which includes developers Vanke and Haishan, has risen more than 6% since the start of the year, reflecting growing investor optimism.
Ting Lu, Nomura’s chief China economist, said Qiushi’s commentary was notable for its breadth.
“This is the most comprehensive assessment of China’s real estate market published in Qiushi since the sector’s collapse in mid-2021,” Ting said in a report earlier this week. “We must not overlook its importance.”
Official Chinese comments, such as Qiushi’s article, are closely monitored as they often hint at domestic policy discussions or a possible change in authorities’ thinking before a decision is announced.
This article was published ahead of China’s annual congress in March, where top leaders gather to set policy goals for the coming year. Details of the next five-year development plan will also be announced at this year’s conference.
“Beijing cannot afford to let the real estate sector stagnate forever, and more decisive action is needed to truly stabilize the real estate sector and the economy as a whole,” Lu said.
“Given rising trade tensions and the possibility of unsustainable strength in the export sector, the Chinese government may ultimately be forced to significantly strengthen its policy tools.”
China’s real estate downturn has dragged on despite a clear call from top leaders in September 2024 to halt the sector’s decline. Since the Chinese government began cracking down on developers’ heavy reliance on debt for growth, new home sales have nearly halved, with floor space sold in 2025 falling to 2009 levels, according to a report this week from the China Real Estate Information Corporation.
Measures introduced so far have focused on easing some restrictions on buyers, initially aimed at discouraging speculation.
Qiushi’s article calls for real estate policy to be implemented “all at once” rather than in a “phased approach.”
Cliff Zhao, chief economist at China Construction Bank International Bank, agreed. He said policies needed to be more proactive, but targeted support to big cities could have a big impact without much cost.
He added that details were likely to emerge only at parliament in March or at a subsequent high-level meeting focused on urban development.
Reject current views on real estate
According to a translation of CNBC’s Chinese commentary, in the official language, the real estate recession is often seen as simply an “adjustment period,” but Qiushi’s article directly emphasizes the urgency for policymakers to “shorten the adjustment period as much as possible.”
Additionally, Qiushi disputed Beijing’s view that real estate is no longer so important to China’s economy, warning that policymakers need to prepare for the possible bankruptcy of real estate companies still struggling with high levels of debt.
Financial stress across the sector remains evident.
Vanke, once one of China’s biggest real estate companies, has struggled to service its debt, prompting S&P Global Ratings to downgrade the developer’s debt. In recent weeks, Vanke narrowly avoided defaulting on a 2 billion yuan ($283 million) domestic bond originally due on Dec. 15, 2025, and later obtained an extension.
In a sign of broader tensions, the outstanding loans of Chinese real estate developers fell year-on-year in the third quarter for the first time in more than a decade, according to official data accessed via Wind Information.
Based on Qiushi’s article, the government is expected to take more innovative and targeted measures, Michelle Kwok, head of Asian real estate and Hong Kong equity research at HSBC, said in a report on Thursday.
“The most impactful policies are likely to be those that significantly reduce the financial burden on homebuyers,” the report said. “In our view, a greater focus on acquiring excess inventory will be a key step in resolving bottlenecks.”
Chinese developers have long sold apartments before they are completed, leaving buyers with loans on unfinished homes. But without funding from new sales or the ability to borrow, developers are also struggling to complete construction.
Given rising trade tensions and the possibility of unsustainable strength in the export sector, the Chinese government may eventually be forced to significantly tighten policy measures.
Ting Lu
Nomura Chief China Economist
Larry Hu, Macquarie’s chief China economist, currently expects housing completions to fall 12% next year, following a 17% decline last year. He also expects new home sales to decline again this year, with a 7% decline in sales floor space.
Hu said it was probably “unlikely for the Chinese government to add significant support until exports decline.” [an] AI bust or Fed tightening?” he said in a report this week.
“If this happens, the Chinese government will have to rely on domestic stimulus to meet its growth targets,” he said, noting that the “most likely option” would be housing support.
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Nomura’s Lu cautioned that Qiushi’s article does not mean policymakers will act in every respect. “This suggests that these views may not yet be fully endorsed at the top level,” he said, noting that the author is deputy director of a research center under the Ministry of Housing.
In contrast, Lu said a Qiushi article published in July suggesting the Chinese government’s plan to curb excessive competition used “pseudo signatures suggesting the commentary was fully supported by the leadership.”
This difference suggests that reaching a high-level agreement on real estate support may take time, especially as the Chinese government may continue to prioritize technology competition with the United States.
