Beijing has shelved the nationwide implementation of a controversial property tax, as China’s policymakers are now preoccupied with unleashing property-purchasing potential to help distressed developers and shore up economic growth.
The US-like property tax did not show up in the five-year lawmaking plan released on Thursday by the Standing Committee of the National People’s Congress, the country’s top legislature.
Instead, boosting the digital economy and ensuring financial stability have been elevated as priorities in the legislative agenda.
Yi Xianrong, a former researcher with the Chinese Academy of Social Sciences, said Beijing is trying to boost consumer confidence and improve expectations, but shelving the property tax “will have little impact on the property market”.
The property tax was previously discussed to curb rising house prices and speculation by increasing homebuyer’s holding costs, and also to alleviate the crushing debt pressure on local governments while advancing Beijing’s plans to narrow the wealth gap.
However, Yi warned of an ongoing transformation of property supply and demand, as price expectations are shifting from “only rising, not falling” to “only falling, not rising”.
The wait-and-see attitude has further pinched developers that are already being squeezed by a debt crisis, as seen with Evergrande and Country Garden. Source: SCMP
