Translated from 21st Century Business Herald

Real estate developers are showing enthusiasm for the increase in housing prices they saw in June and July, while keeping an eye on the government’s response.

The improvement in the Chinese real estate market proves that disposable capital is again flowing into the housing market amid the slumping economy, making the economic situation even worse.

Central authorities are right to strictly control housing prices, for that is the most effective way to prevent the real estate market from drawing in too much capital from the real economy. A deluge of money into property will not only intensify inflationary pressures but also affect the transformation of China’s economic structure.

So real estate developers should not expect authorities to let them run wild. To boost domestic demand, the Chinese government will probably cut taxes instead of adopting huge stimulus packages.

This is a good opportunity to curb the administration’s excessive interference in the market to further stimulate the development of the Chinese private and real economies with the use of more wise financial policies.

These measures are meant to deflate the bubble in the real estate market and transform China’s means of achieving economic growth.

(Translated by Li Yang)