Strengthen financial supervision to promote quality improvement and efficiency enhancement in the real estate market.

　　Real estate financial risks have recently become the focus of public attention. At the “2020 China International Finance Annual Forum” held on September 6, Zhou Liang, Vice Chairman of the China Banking and Insurance Regulatory Commission, stated that it is essential to strictly adhere to the principle of “housing is for living, not for speculation,” regulate real estate lending activities, and prevent the over-financialization of the real estate market. The Ministry of Housing and Urban-Rural Development and the People’s Bank of China convened a symposium with key real estate enterprises in Beijing to discuss further implementation of long-term mechanisms for the real estate sector.

　　As the epidemic prevention and control situation continues to improve, many industries are showing signs of recovery—and the real estate market is no exception. Data shows that from January to July, real estate enterprises secured 10,062.5 billion yuan in funding, representing a year-on-year increase of 0.8%, marking the first positive growth since the beginning of this year. During the epidemic prevention and control period, Guangzhou Yuexiu also saw residential land prices reach a record high of 63,000 yuan per square meter.

　　Public opinion suggests that easing restrictions on the property market may become a major trend. However, successive statements from the relevant authorities have once again clearly defined the direction of real estate financial regulation policies, emphasizing policy consistency and continuity.

　　Data show that housing market prices exhibit significant regional disparities, with varying levels of risk concentration across different cities. Although the overall housing market is rebounding, performance differs considerably from one city to another. Taking the sales area of commercial residential properties as an example, from January to July, the northeastern region saw a year-on-year decline of 14.5%, while the eastern region experienced only a 2.2% decrease. Among large and medium-sized cities, 13 cities reported year-on-year increases in the number of newly built homes sold, whereas 23 cities saw declines to varying degrees.

　　With the market recovering, real estate lending has become somewhat more relaxed, and “shadow banking” activities are showing signs of revival. Although land transactions slowed down during the pandemic control period, land prices have continued to rise. Many real estate companies and financial institutions have turned to “shadow banking” for financing, using these funds to expand their businesses and further exacerbating the accumulation of risks in the real estate finance sector.

　　The primary function of financial markets is to serve the real economy. Emphasizing the consistency and continuity of regulatory policies in the real estate financial market and strengthening oversight of real estate financing will help channel funds toward the real economy and promote the country’s efforts to build a “domestic large-cycle” system. The dual impact of the pandemic and fluctuations in overseas markets calls for economic development to place greater emphasis on boosting the vitality of domestic market players and unleashing market potential. Financial markets should fully leverage their resource-allocation function, guiding capital flows toward new infrastructure, high-tech industries, and sectors and enterprises with strong links to industrial chains, thereby empowering the construction of the “domestic large-cycle.”

　　Strengthening regulation of the real estate financial market will help rectify the chaos in the real estate sector, compel real estate enterprises to undergo transformation, and enhance their operational standards and efficiency. Relaxation of financial market regulations will inevitably lead real estate companies to shift away from their core business and place greater emphasis on financial activities. Tightening oversight of funds, however, will force these companies to establish sound, sophisticated management systems—ensuring quality while accelerating turnover, improving capital-use efficiency, and facilitating a transition toward intensive, high-efficiency enterprises. This, in turn, will contribute to enhancing the overall quality and efficiency of China’s real estate market.

　　The successive statements from the competent authorities represent a strong response to earlier market expectations and set the tone for further strengthening the regulation of real estate financing. The central government’s regulatory direction on real estate financial risks has never changed, and its determination to prevent the emergence of such risks remains unwavering.