W.Y. Kwok
The Politburo of the Central Committee of the Chinese Communist Party (CCP) held an unusual meeting on September 26 to “analyze the current economic situation and draw up plans for the next phase of economic work.” Politburo meetings related to economic work are usually held in April, July, and December each year. Analysts believe the unusual focus of the September meeting demonstrates the Party leadership’s heightened concern about the current economic situation (Xinhua, The Paper, September 26).
CCP General Secretary Xi Jinping chaired the meeting, which acknowledged that while favorable economic conditions persist, “some new situations and challenges (一些新的情况和问题)” have emerged. For the first time since 2021, the need to “promote halting the fall and returning to stability in the real estate market (促进房地产市场止跌回稳)” was explicitly stated (The Paper, September 26).
This shift in policy comes against the backdrop of President Xi’s “Three Red Lines (三条红线)” policy, introduced in 2020. This policy set firm standards to restrict financing for real estate developers based on their debt-to-cash, equity, and assets ratios. Developers were divided into four tiers, each with different borrowing standards based on an assessment of their financial health. In 2022, fewer than 30 of the 100 listed real estate companies were on the right side of the three red lines, with another 30 crossing all three red lines, reaching the highest “red” tier (Sohu, May 4, 2022).
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