PBOC Governor: "Real Estate Near Bottom... Signs of Psychological and Price Normalization"

"Adjustment Helps Long-Term Sustainable Development"
"Real Estate Industry Enters a New Balance"

The governor of China's central bank told overseas investors that the real estate market is approaching the bottom, and that sentiment and prices are showing signs of normalization.

Pan Gongsheng, governor of the People's Bank of China, responded this way to international investors' questions about the Chinese real estate market and local government debt during a Q&A session following the Hong Kong Monetary Authority-Bank for International Settlements (BIS) high-level meeting on the 28th.

[Image source=Yonhap News]

Governor Pan explained, "China's real estate industry has experienced rapid growth over the past 30 years, and adjustments will help China's economic growth and long-term sustainable development," adding, "In the short term, we must pay attention to the risk of real estate adjustments spreading to other sectors."

He continued, "The Chinese government has taken measures such as lowering down payment ratios, reducing mortgage interest rates, supporting financial institutions in financing developers' debt, and assisting industry mergers and acquisitions," emphasizing, "These are gradually showing results, and the real estate industry is entering a new balance."

He also cited a Standard & Poor's (S&P) report, stating, "Sentiment and prices in the Chinese real estate market have begun to show signs of normalization and are approaching the bottom," then paused briefly and added jokingly, "That is their perspective."

Regarding local government debt, he provided an analysis that it is at a lower level compared to other major countries. As of the end of last year, Chinese government debt was about 60 trillion yuan, approximately 50% of GDP, with local government debt around 35 trillion yuan. Based on BIS statistics, he explained that China's government debt is about 78% of GDP, which is lower than the Group of Twenty (G20) average of 94% and slightly higher than emerging markets.

Governor Pan stressed, "There are two characteristics of China's local government debt: first, most bonds are related to infrastructure investment and are secured by tangible assets," and "second, the debt arises mainly in the relatively fast-growing eastern and central regions, where repayment is not problematic, and only a few economically underdeveloped regions like the western or northeastern areas face pressure."

In an earlier speech, he said the Chinese economy is showing a clear recovery trend and is expected to successfully achieve the annual growth target (around 5.0%). He stated, "Looking ahead, China has advantages such as strong innovation capabilities, a broad market, complete infrastructure, a comprehensive industrial supply chain, and abundant human resources. As the effects of announced policies emerge, I believe the Chinese economy will maintain sustainable growth beyond next year."

He pointed out, "China's total GDP exceeds 120 trillion yuan, about 18 trillion dollars, so sustaining the previous high-speed growth of 8-10% annually is difficult," and added, "If we rely excessively on traditional economic growth models like infrastructure and real estate investment, higher short-term growth rates can be achieved, but this solidifies structural contradictions and undermines the sustainability of growth."

Governor Pan concluded, "The People's Bank of China will continue to implement strong monetary policies to support real economic development," and explained, "We will meet the needs of international investors and provide convenience for direct investment in China's financial markets."

This content was produced with the assistance of AI translation services.