China hopes to boost economy with fresh support for the property market amid signs of renewed weakness

• Chinese regulators may offer fresh support to the ailing property market, Bloomberg reported.
• Proposed policies include reductions in down payments and real-estate commissions.

Chinese regulators are considering a new set of property market policies that would uplift the struggling sector, Bloomberg reported.

Among the proposals, the government could reduce down payments in certain city neighborhoods, diminish the size of real-estate agent commissions, and ease current restrictions on purchasing homes.

Some of these measures would be an extension of last year's rescue package, which introduced 16 policies to support the property sector. These included ways to encourage homebuyers, as well as ideas for combating liquidity turmoil among developers.

News of the possible support helped strengthen the onshore yuan by over 0.5% against the dollar. Copper and iron, other commodities used in construction also gained.

Though still subject to change, the new support package comes as China's real-estate market continues to hold back the economy. Due to excessive debt among developers — over one-fifth the size of China's GDP — and soft home prices, the sector has been feared to potentially collapse.

Residential market weakness has since re-emerged, with home sales growth slowing to 6.7% in May, from 29% in the prior two months. Meanwhile, developers remain at risk of defaulting, despite the continued policy changes and attempts to generate liquidity.

Overall, the Chinese economy has lost momentum following a strong first-quarter GDP bump after strict COVID restrictions were lifted late last year.

Apart from slumping real-estate, manufacturing has also contracted significantly in May, while the service sector cooled. Demand from the consumer side has also been slowing, leading Rockefeller International's Ruchir Sharma to call the reopening narrative a "charade."