In a bid to boost China’s economy, the government has rembraced the investment-driven growth model. Lianhe Global lays out what this means for the country’s property sector and LGFVs.
The ongoing trade war between the US and China has put pressure on China’s economic growth since late 2018. The Chinese central government subsequently announced initiatives to support economic growth by increasing investment in infrastructure projects, including affordable housing and rejuvenation of old communities.
Chinese local government financing vehicles (LGFV) and property developers are likely to benefit from these stimulus measures. In addition, ongoing urbanisation in China is a supporting factor for China’s property market, while revenue from land sales are one of the main contributors to Chinese local governments’ fiscal revenue.