In 2022, China’s economy faced a major shock as the Evergrande liquidity crisis triggered a real estate recession, straining local government budgets, household consumption, and the broader macroeconomy. Many view this as a turning point in China's economic development. Local governments, heavily reliant on land sales for over half their revenue from 2010 to 2020, accumulated unsustainable debt as the real estate bubble burst. By September 2024, the People’s Bank of China introduced a significant stimulus package, including monetary easing and property market reforms. In November, a RMB 6 trillion increase in local government debt limits was approved to restructure hidden debt held by financing vehicles, easing fiscal pressures and improving creditor security.

However, critical questions remain: Will these interventions suffice to boost the macroeconomic outlook and rebuild consumer confidence in China? What additional measures are necessary to address the systemic challenges of local government debt and achieve sustainable stability in the housing market? This panel will explore the systemic issues in China’s fiscal framework, the implications of local governments’ reliance on land finance, and the effectiveness of recent policies in stabilising the housing market and reshaping China’s growth trajectory.