The Development Trend of China's Housing Market and Policy Options

By Ren Xingzhou & Shao Ting

Institute of Market Economy of DRC

Preface: Pursue New Progress in the Transformation of Development Model and Maintain Stable Economic Operation

China is experiencing a critical historical period. Domestically speaking, we are facing the major tasks of realizing the transformation of economic development model, successfully steering through the middle-income phase, and ensuring continued advance of China's modernization drive. Globally speaking, the world economy has entered a stage for profound adjustment and transformation. The financial crisis keeps brewing and recovery of developed economies is frequently frustrated; a new round of industrial and technological revolutions is boosting along with the booming development of strategic emerging industries. This has not only greatly affected China's current stable and sound economic development, but also posed daunting challenges to its efforts to innovate comparative advantages and improve international competitiveness of industries. Under such circumstances, it has become especially crucial and more urgent to ensure China's stable and sound economic and social development and to accelerate transformation of economic development model.

In light of the volatile and grim internal and external situation, the central government has set the target of "pursuing progress in stable development" as the key task in 2012, and stressed that we should make new progress in transforming economic development model with stable economic and social development. Judging from economic operation of the previous three quarters, this decision of the central government is quite correct. It can be said that we have made some initial progress in terms of keeping smooth macro-economic performance and making structural adjustment.

Looking ahead, deep-seated ramifications stemmed from the international financial crisis might continue to loom up, world economic recovery will become more obviously uncertain and unstable, the international market remains sluggish, and negative factors affecting China's exports might exist for a long period. Meanwhile, it is difficult for China to achieve remarkable results in stimulating consumption and expanding domestic demand; some internal conflicts and problems in terms of imbalanced, uncoordinated and unsustainable economic development will also become more evident; economic growth will still face huge downward pressure.

Under such circumstances, securing stable economic operation through macro-policy readjustment remains a major task for us in years to come. Admittedly, we should be clearly aware that new progress must be made in transforming economic development model in order to maintain stable and sound development for a long term. It is worth special attention that we should work hard on dealing with the relationship between keeping stable growth, adjusting the structure and transforming development model. On one hand, we should make efforts to create necessary and adequate conditions for restructuring while maintaining stable growth, adopt adequate policy measures that are beneficial for expanding demand, optimizing structure and increasing supply, ensure that economic growth dovetails with the growth stage, avoid negative influences of excess demand expansion on restructuring, and ward off and resolve possible risks resulting from downward pressure upon economy. On the other hand, we should proactively promote institutional reform and innovation, remove barriers against optimizing resource allocation, and stimulate market vigor so as to lay a foundation for stable and sound economic development in the long run.

Numerous theoretical and policy problems require profound and systematic research in terms of pursuing new progress in development model transformation while maintaining stable economic operation. The Development Research Center (DRC), as a policy research and consulting institution directly under the State Council, keeps firmly to the principle of serving the central government's policy-making projects, follows up the world development trend leverages DRC's advantage to proactively build it into a first-class think tank in light of China's conditions, and works hard to provide high-quality policy options and consultant advice for the central government. In recent years, through continued efforts made by research staff of DRC, a number of research reports have been worked out with relevant reference value for policy making and have generated certain social impact. These reports focus on the big picture of economic development, follow frontier academic trends, involving both strategic analysis of China's mid-and-long-term economic development and specific studies in pertinent fields such as reform of the economic system, adjustment of the industrial structure, foreign trade, urbanization, social management, real estate macro-control, the issues relating to agriculture, farmers and rural areas, and fiscal and financial risks.

It has been three years since the publication of DRC Book Series. The book series have aroused wide concern from various social circles and those researches, conducted with a forward-looking perspective and on the overall, comprehensive, strategic and long-term issues, have exerted much influence on related government bodies, local governments, relevant enterprises, research facilities and various social sectors. For instance, the book entitled "Twelve Questions on the Twelfth Five-Year Plan Development" served as a key reference for local governments to formulate development plans. Some books like "China's Urbanization: Prospects, Strategy and Policies", "China's Industrial Rejuvenation, Transformation and Upgrading", "Granting Urban Residency to Migrant Workers: Institutional Innovation and Top-level Policy Design" and other works have become important reference materials for local governments in making policies, with gratifying social results. The publication of these research findings has played a positive role in building DRC into a first-class think tank and disseminating excellent academic results.

This year's DRC Book Series contain 12 books, including "A Dramatic Change: China's International Economic and Trade Environment of Peaceful Development and General Strategy", "People's Wellbeing-Based Public Service: China's Approach for Further Improvement" and etc. These works are mainly selected from DRC researchers' reports on major social and economic issues in 2011 and some are chosen from excellent research reports on bidding projects. These books have given full expression to the latest research findings of DRC as well as its endeavour in providing policy suggestions and consulting advice for CPC Central Committee and the State Council.

It is sincerely hoped that leading officials from various social circles and readers at large will not spare their comments and valuable suggestions on the book series so that they can really serve as a window for people to learn about China's reform and opening-up and economic development. It is also hoped that people from all circles of life would just as in the past bolster our work relating to policy consultancy and research. Let us join our hands and make common efforts in doing our bit for the promotion of China's transformation of economic development model and a sound and smooth economic performance.

(The Preface is contributed by Li Wei, President of the Development Research Center of the State Council)

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