Chinese city economies need to cut reliance on real estate: state media

China’s regional economies need to reduce their reliance on the property market for growth and focus on sustainable longer-term development, the Communist Party’s People’s Daily wrote on Wednesday.

“All areas should focus on their own urbanization processes, develop their own pillar industries according to population mobility and resources, and form new points of growth to avoid the old road of relying on real estate to drive the economy,” the commentary quoted a professor at the Capital University of Economics and Business as saying.

The commentary, which appeared in the international edition of the People’s Daily, said a stable and healthy property market is crucial to the development of China’s changing economy.

It cited an analyst as saying that a thriving property market driven by reasonable prices boosts demand for both raw materials and downstream items such as appliances and home decoration.

Average new home prices in China’s 70 major cities rose for a 43rd straight month in November. However, the rate of increase slowed amid weaker growth in the country’s smaller cities, and soft home sales and land purchases suggest a dim outlook for the sector.

The article also comes as a number of Chinese city authorities seek to ease existing curbs on their property markets, despite broader directives from Beijing to keep prices in check. Last week, the city of Hengyang rescinded an order to lift restrictions on property prices that it had introduced just a day earlier.

Reporting by Andrew Galbraith; Editing by Sam Holmes