Nov. 30 (Bloomberg) -- The government’s ability to control and manage the property sector skilfully will be key next year because of the industry’s links with local government debt, banks, stock markets and social stability, said Xia Bin, a central bank adviser and researcher at the State Council’s Development Research Center.
The government needs to avoid a “free fall” in property prices and transactions while maintaining curbs, he said at a conference in Beijing today.
China should deflate the property bubble slowly over one to two years to prevent a drastic shock to investment and growth and avoid “systemic risk,” he said.
The government should gradually use taxes rather than administrative measures such as curbs on purchases to cool property speculation, and it should raise sales taxes rather than property taxes on owners of multiple homes, he said.
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