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Opinion
Matthew Brooker

Can China Step Off Its Property Treadmill? Not Likely

The real estate bubble has made prices beyond unaffordable, but even a simple solution like a property tax could be a dire threat to the economy. 

What happens when you can’t let go and you can’t hold on?

What happens when you can’t let go and you can’t hold on?

Photographer: Print Collector/Hulton Archive/Getty

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Danny, the political theorist, aspiring lawyer and purveyor of rare herbs in the British cult film Withnail and I, understood the problem of Chinese real estate. “If you're hanging on to a rising balloon, you're presented with a difficult decision,” he observes. “Let go before it's too late or hang on and keep getting higher, posing the question: How long can you keep a grip on the rope?”

Several Chinese cities suspended land sales in recent days and weeks, after a revamped auction system failed to have the desired effect of restraining prices. It was the latest of Beijing’s periodic stop-start attempts to cool the housing market. This year, these have also included revived talk of introducing a recurrent property tax, a long-debated measure that has gained fresh impetus as President Xi Jinping places a priority on reducing inequality. Don’t expect these efforts to amount to much, at least in the short term.