China’s top decision-makers, led by President Xi Jinping, have committed to taking substantial measures to bolster the nation’s struggling real estate market, according to state media reports. The announcement comes as part of a comprehensive plan to navigate the world’s second-largest economy through an uneven rebound.

BEIJING: Facing challenges on various fronts, China’s economy is grappling with a significant debt crisis within its property sector. In a closed-door annual meeting held on Monday and Tuesday, President Xi Jinping and other key leaders vowed to “actively yet safely defuse risks in the real estate sector” and to “meet the reasonable financing needs of real estate enterprises.”

The leaders also emphasized their commitment to “coordinate efforts to defuse risks from small and medium-sized financial institutions in real estate local debt” and to “continue to effectively guard against and defuse risks in key areas,” as reported by state broadcaster CCTV.

Moody’s recently downgraded China’s credit rating outlook to negative, citing “broad downside risks to China’s fiscal, economic, and institutional strength” triggered by the real estate crisis. Despite Beijing’s finance ministry dismissing these concerns as “unnecessary,” the real estate market remains a major source of worry.

Acknowledging the industry’s deep debt crisis, where some of the largest developers face insurmountable debts, the leaders highlighted its pivotal role, accounting for around a quarter of China’s gross domestic product (GDP). Evergrande, one of China’s major real estate developers with over $300 billion in liabilities, has been given until late January to devise a restructuring plan.

The economic meeting also addressed China’s broader economic challenges and outlined priorities for economic work in 2024. President Xi Jinping emphasized that China’s economic recovery is “at a critical stage,” ordering measures to boost demand and mitigate risks. While exports showed a positive trend in November, challenges such as a surprise drop in imports and a decline into deflation signal the complexities China faces in achieving its growth targets.

As China navigates these economic challenges, the commitment to supporting the real estate sector underscores its significance in the nation’s economic recovery and long-term positive outlook. The leaders acknowledged that China still faces difficulties and challenges but expressed confidence in the fundamental trend of economic recovery.

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