“The current Chinese real estate market is exactly a “swinging” market, which also directly confirms a viewpoint that, our multiple rounds of regulation over these years all merely alleviate the symptoms but fail to effect a permanent cure.” On October 10, The Thirteenth CSMEF China SMEs Summit Forum was held in Guangzhou. During the meeting, Jia Kang,a famous economist, former Head of MOH Finance Section, and President of China Academy of New Supply-side Economics, made the above comments at the time of interview with a reporter.

Jia Kang stated that, the simple policy means should be changed, and only systematic rules and regulations, including land, investment/financing, housing and taxation, would be the fundamental solution to China’s real estate issues; he also called again for accelerating the real estate tax legislation and pushing forward reforms.

Jia Kang said, the “swinging” performance of real estate market is that, several months ago, everyone was worried about de-stocking in third-tier and fourth-tier cities, under so heavy pressure that even many second-tier cities were feeling depressed, but unexpectedly, the situation changed rapidly, with the booming real estate market in first-tier cities, followed generally by second-tier cities, forcing each city’s government now to introduce such policies as purchase restrictions and loan restrictions successively.

Jia Kang explained, the reason for saying the current regulation cures the symptoms only is that, easing is to cancel purchase restrictions and loan restrictions, while tightening is to resuming purchase restrictions and loan restrictions, but now this is obviously not enough.”

Then, how to “effect a permanent cure”? Jia Kang analyzed, the simple policy means should be changed, or policy means should be complemented with systematical institutional frameworks, including rules and regulations on land, investment/financing, housing and taxation, which would play a fundamental role.

Taking the real estate tax for example, Jia Kang said, the real estate tax cannot be relied upon as a key stand that controlling the overall situation, but it’s required in the institutional construction of real estate market; although not omnipotent, tax measures must be taken when they should be.

He stated that, the current social concerns brought by the real estate market have again demonstrated that, efforts must be made to overcome reform difficulties, accelerate real estate tax legislation and push forward reforms, which must correspond to reforms of land, housing and investment/financing systems.

“To go toward a modern society and establish a modern tax system, a real estate tax that everyone hates must be available in China.” Jia Kang believed, China has to get through this challenge sooner or later, and must try hard not to lag so behind.

On the other hand, Jia Kang commented, currently there are also some cities quite successful in strategies and systems for stabilizing the real estate market, for example, Chongqing has established an effective land indicator system to ensure minimum housing price fluctuations, which can serve as a reference of other cities.