Why Beijing is letting parts of China’s property sector fail
The new goal is to improve the quality and efficiency of existing stock, rather than chase headline growth through new construction
Per official stats, investment in real estate development plummeted by 11.2 per cent in the first half of 2025, a steeper decline than the 10.6 per cent drop for the entirety of 2024. This casts a shadow on Premier Li Qiang’s optimistic pledge at a July State Council meeting to consolidate and expand the positive momentum of economic recovery.
The worsening state of real estate once again raises questions about whether China’s leadership will – or should – intervene.
The malaise in the sector is hardly news, but its implications remain profound. Leaving aside the impact on fixed-asset investment, the property and construction industries directly employ over 50 million people, a figure that excludes millions more in upstream and downstream industries like construction materials, home decoration and real estate brokerage. The downturn exerts direct pressure on income growth, disproportionately affecting vulnerable groups like migrant workers, who form the backbone of construction labour.