To regulate the economy, we need to grasp the main contradictions. At present, the main contradiction of China’s economy is the epidemic and real estate. Under the impact of the epidemic, China’s macroeconomic data fell in April 2022. However, from the high-frequency data, the impact of the epidemic on China’s economic activities may have reached its peak, and the worst time is likely to be over.
Real estate is another key to China’s economy. At present, the vicious circle of the real estate industry has not been broken and is in an extremely abnormal state as a whole. Over the past decade, the financing of the real estate industry has been highly sensitive to interest rates. However, the positive correlation between the growth rate of mortgage loans and the decline of treasury bond yield, which has lasted for more than ten years, has now been broken, and the degree of deviation between the two has never been seen before. In April 2022, the growth rate of land purchase area fell to a 10-year low, but the growth rate of land purchase price rose to a 10-year high. The degree of deviation between the two has never been seen before.
When the real estate industry is caught in a vicious circle that it is difficult to get rid of and the credit risk of real estate developers remains high, the industrial “difficult Asset Relief Plan” endorsed by the government’s credit can effectively reshape the confidence of the industry, so as to enable real estate developers to return to normal as soon as possible. Before the recovery of real estate supply, if the demand for real estate is stimulated too fast or too fiercely, it is likely to cause a sharp rise in house prices and put macro policies in a dilemma. In order to better control the rise of land price and house price, it is also necessary to adjust the centralized land supply policy which has an obvious pushing effect on land price
