Policy clarification required

Conflicting messages on macroeconomic targets and property control measures are adding to the government's challenge of stimulating economic growth in the second half of this year, a top think tank has warned.

The National Academy of Economic Strategy under the Chinese Academy of Social Sciences said in a report released on Monday, that the government should maintain its tighter property credit policy, but improve its current property policies in an effort to reverse the recent rising price trend, and prevent a "retaliatory rebound".

A construction worker at a housing project in Qingdao, Shandong province, on Wednesday. China's real estate investment grew 16.6 percent in the first six months of this year, compared with 32.9 percent growth in the same period last year. Yu Fangping / For China Daily

But Ni Pengfei, who chaired the writing of the report, said the most urgent need is to reverse some industry and public perceptions, which may have diverted attention from the central government's property control targets.

"This is not caused by the macroeconomic policy itself, but changing market expectations and panic purchasing by the public," Ni said.

Over the past month, data showed property prices gradually starting to reverse the falls of previous months, with slight rises in certain areas, giving ground to fears that the market - after a year-long freeze - might be starting to thaw.

Meanwhile, amid fears the economy may dip further in the second half of this year, China has cut interest rates twice within a month.

A sharp decline in real estate investment activity has also fueled expectations that Beijing might loosen the price curb policies in an effort to stabilize the economy in the second half.

According to the report, the moves may have reduced property developers' and homebuyers' lending costs, but they have also been interpreted by some as a signal the central government may be giving economic growth more of a priority than any further loosening of price controls, and this may harm performance in the second half of the year.

According to the National Bureau of Statistics, real estate investment grew 16.6 percent in the first six months of this year, compared with 32.9 percent in the same period last year.