China's economy projected to hit RMB 140 trillion amid real estate surge
- The National Development and Reform Commission announced four major actions aimed at enhancing urbanization by 2035.
- Real estate stocks surged significantly following these policy announcements.
- The government's plan for new urbanization is likely to boost consumer confidence and economic growth.
In the context of ongoing economic activities, China has recently taken substantial steps to boost its real estate market, which has seen significant gains in stock performance. Following the announcement of four major actions of high-quality new urbanization by the National Development and Reform Commission (NDRC), real estate stocks surged in both Hong Kong and Mainland China. Specifically, the Hong Kong market experienced a 5.19% increase while the Mainland saw a 2.38% increase. These actions aim to facilitate population movement into cities and enhance recovery of idle land and existing commercial housing, thus aiding the urbanization process expected by 2035. Despite experiencing growth early in 2024, foreign investor interest in China stocks remains lackluster, as indicated by the eon of readings above 60% being rare. Investors within China, however, are exhibiting faith in the domestic stock market, leading to a notable breakout above pre-Liberation day levels on exchanges in Shanghai and Shenzhen. This domestic confidence has been spurred by government policies supporting new urbanization. Additionally, a debt restructuring approved for distressed developer Logan Group has contributed to positive market sentiment. The Ministry of Human Resources and Ministry of Finance also announced a 2% increase in basic pension payments, highlighting the government's efforts to improve welfare and stimulate domestic consumption. With projections showing the Chinese economy could reach RMB 140 trillion during the current Five Year Plan, this is framed against the backdrop of an anticipated RMB 35 trillion growth during the plan's duration. Consequently, analysts speculate that improving real estate prices could bolster consumer confidence and spark increased domestic consumption, further supporting economic growth. The drive for new urbanization, complemented by supportive fiscal and policy measures, aligns with broader trends in China's economic strategy, particularly amid rising tensions with the United States over trade.