Tim Condon, Chief Economist at ING, thinks a pre-condition is halting the decline in Chinese housing starts as they consider policy support for housing a watching brief with more on the way. Key Quotes “We wrote yesterday that we hadn’t seen any surprises from the NPC. Players in the iron ore market saw something. Pundits attributed yesterday’s biggest-ever one-day price bounce to among other things NPC-related stimulus hopes. We live in hope and the hope is that the steep housing correction, which has seen a 15% drop in starts for two consecutive years, ends this year. The difficulty is the bifurcated housing market. The loosening of macroprudential property-cooling measures has overheated markets in the Tier 1 cities, again, while markets in higher-Tier cities are weighed down by high levels of unsold homes. The authorities are tailoring policy. Yesterday, Cheng Zhengao, head of the Ministry of Housing and Urban-Rural Development, said Tier 1 cities should continue to implement home purchase restrictions and crack down on speculative demand, while the government will increase the supply of land and small units in Tier 1 cities. And for cities with excess inventories, Guangdong province is showing the way. Governor Zhu Xiaodan said large SOEs would purchase residential housing for conversion into affordable housing. The 2016 target for fixed asset investment growth is 10.5%, down from 15.0% in 2015 but up from the actual 9.8%. We believe hitting the target depends on halting the slowdown in the growth of real estate FAI, which accounted for 17% of FAI in 2015 and whose growth slowed to 1.0% from 10.5%. We think a pre-condition is halting the decline in housing starts. We consider policy support for housing a watching brief with more on the way.” For more information, read our latest forex news.