Will Beijing bail out the property market?

CHINA ADVISORY - Report 29 Sep 2025 by Andrew Collier

“China’s regulatory rescue efforts are sometimes cautious, like giving a band-aid after a knife wound,” said Huan Li, co-founder of Forest Capital Hong Kong Ltd., a hedge fund with $200 million under management. “They don’t act until the worst moment, but when that comes, it may be too late.” Bloomberg News.

Investors, developers, and homebuyers are all hoping that Beijing will bail out the property industry with a massive stimulus combined with support for homeowners and property developers. While there has been some macroeconomic assistance, targeted financial aid has been relatively small. There have been isolated bailouts from central government revenue, particularly for the large firm Vanke. But these are the exception, not the rule. Total property developer debt is estimated by the IMF at $1.5 trillion or 9 percent of GDP.

The majority of the stimulus paid out has come from local governments through bank loans rather than direct subsidies from the central government. Unfortunately, local governments are running higher deficits (from 4 percent to 6 percent under new rules) and have been forced to tap resources from local state firms and local banks. This is unsustainable. The relatively modest amount of support will not halt further erosion in property sales or prices until a floor is achieved, most likely by mid-to-late 2026.

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