BEIJING — Three years after China Evergrande Group's collapse sent shockwaves through global financial markets, the Chinese property sector remains mired in a crisis that has proven far more stubborn than any official forecast anticipated. Unsold housing inventory across China has reached an estimated 5.5 trillion yuan ($800 billion), according to calculations by Nomura, a figure equivalent to roughly 4% of GDP. Local government finances, heavily dependent on land sales that have fallen 45% from their peak, are under severe strain. And consumer confidence — the crucial variable for any housing market recovery — remains at historic lows.

The policy response has been aggressive by any standard. The People's Bank of China has cut the five-year loan prime rate (the benchmark for mortgages) six times since 2024, bringing it to 3.25%. Local governments have removed essentially all purchase restrictions. The central government has established a 500 billion yuan "housing stabilization fund" to purchase unsold inventory and convert it into affordable housing. Yet the measures have produced only modest results. New home prices in 70 major cities continue to decline, albeit at a slowing pace, and transaction volumes remain 35% below 2019 levels.

The IMF, in its most recent Article IV consultation, emphasized that "a durable recovery in China's property sector is essential not only for domestic financial stability but for global growth." The Fund estimated that China's property downturn has subtracted roughly 1.5 percentage points from GDP growth annually since 2023. For a global economy increasingly dependent on Chinese demand, the property sector's health is a macroeconomic variable of the first order.