For years, Beijing attempted to trade flats for microchips, a bold effort to rewire the economy. But 2025 showed that a hi-tech superstructure cannot be built on the crumbling foundation of a middle-class balance sheet. Now, in the opening 2026 issue of Qiushi, the Communist Party’s most influential journal, a new signal has emerged, indicating that the leadership is prepared to halt the decline.
A key commentary in the journal presents a notable analytical shift. It reaffirms real estate as a foundational industry of the national economy and a primary store of household wealth, while emphasising its significant characteristics as a financial asset. Beyond acknowledging the fundamental changes in supply and demand, the article concedes that restoring confidence will be a gradual process. Consequently, it advocates all-out policy implementation, rejecting the piecemeal approaches of the past to stabilise expectations.
This marks a strategic departure from the rhetoric of the last five years. It suggests the policy pendulum, which had swung decisively towards cost containment, is recalibrating towards asset stability.
To understand this shift, one must recognise the two rival schools of thought that have shaped Chinese macroeconomic policy.
The asset school treats real estate as the economy’s primary credit multiplier. In this view, rising valuations create a wealth effect for families and a high-octane fiscal engine for local governments. This camp dominated the decade leading up to 2015, particularly after the declaration of property as a pillar industry in 2003.
Conversely, the cost school, which gained the upper hand in 2016, viewed property as a structural impediment to productivity. By advocating the principle that houses are for shelter rather than speculation, it sought to lower labour costs and redirect capital towards innovation. Its logic culminated in the “three red lines” policy of 2020, which sought to systematically moderate the financial intensity of real estate.
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