Opinion | With urban renewal, China is buying its economy time

China’s preferred strategy is steady city development over debt-fuelled expansion and slow-burning stimulus over headline-making injections

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A view of homes in Beijing on December 16. The deeper value of upgrading older buildings and the surrounding infrastructure lies in long-term spillover effects, such as follow-on spending. Photo: EPA-EFE

Published: 4:30pm, 28 May 2025Updated: 5:22pm, 28 May 2025

In recent months, the Chinese government’s deliberate pace in responding to economic headwinds has frustrated markets. Faced with persistent weakness in household consumption, a drawn-out property downturn and growing external uncertainty, many had hoped Beijing would turn to bold stimulus measures or administer direct cash transfers to citizens.

Yet time and again, officials have signalled their intent to stay the course – doubling down on slow-moving structural reforms rather than short-term fixes. The State Council’s latest campaign to promote urban renewal offers a case in point.

Urban renewal is not a novel concept. Since the programme was first flagged in the 2019 central economic work conference, local governments have improved ageing neighbourhoods, redeveloped dilapidated housing and repurposed underused land – progress reviewed at length at a State Council press conference last week. Alongside a fresh set of high-level guidelines, the government pledged more fiscal and policy support for the programme to achieve tangible results by 2030.

The push underscores a pivot in China’s preferred growth strategy: away from debt-fuelled expansion on the urban fringe and towards more deliberate, infill-oriented development within city cores. From a policy perspective, urban renewal serves short-term needs. With residential housing activity still tepid, upgrading older buildings and the surrounding infrastructure helps keep construction activity afloat and provides a buffer against unemployment.

But the deeper value of urban renewal lies in its long-term spillover effects. Renovated buildings and neighbourhoods can trigger a wave of follow-on spending – from home refurbishments and appliances to smart home systems.

Better parking access and charging infrastructure can spur car purchases. Upgraded public spaces can raise property values, enhance quality of life and generate more stable local tax revenues. In short, renewal is a slow-burning stimulus – one that works through second- and third-order effects rather than headline-making injections.

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