“Qiushi Sets the Tone on Household Balance Sheets: This Wealth Defense Battle Is Getting Serious”

Text by Xiaolongren | Produced by “Fanglian News”

Recently, a highly significant commentary article published on the *Qiushi* website has completely shattered many of the previous policy gray areas in real estate and financial circles. The article did not shy away from the once-sensitive term “household balance sheet,” but instead clearly and directly set the tone: We must accelerate the repair of household balance sheets, focus on stabilizing the real estate market, and prevent the negative spiral of asset price declines on consumer confidence.

For “Fanglian News,” which has long tracked the macro cycles of real estate, this statement represents not just an upgrade of the policy toolkit, but also marks a historic “cognitive framework shift” in the top-level design of macroeconomic diagnosis. It not only acknowledges the constraints that asset price (housing, stocks) shrinkage imposes on the real economy but also formally shifts the regulatory focus from the past “supply-side risk prevention” to “demand-side spiral prevention.”

Why Address the “Household Balance Sheet” Now?

To grasp the deeper meaning of this lengthy article, one must first deconstruct the wealth ledger that Chinese households currently face during this deep adjustment cycle:

• The Full Reversal of the “Wealth Effect”: In the era of growth over the past two decades, the wealth structure of Chinese households became highly concentrated. According to past central bank surveys on urban household assets and liabilities, physical assets like housing typically account for nearly 70% of total household assets. As real estate enters a stock cycle and asset valuations decline, the most direct consequence is that residents feel their “family wealth is shrinking.”
• The “Deadly Scissors” of Asset Shrinkage and Rigid Liabilities: In a standard balance sheet, Assets = Liabilities + Owner’s Equity (Net Assets). When second-hand housing prices adjust, the asset side continuously depreciates. However, the long-term mortgage loans (liability side) taken on during the golden era are absolutely rigid and must be repaid in full monthly. This squeeze of “shrinking assets, unmoving liabilities” forces the “equity side” (i.e., personal net assets) of residents to tighten passively.
• Rational Micro-Individuals Combine into a Defensive Macro-Winter: Faced with diminished personal wealth and uncertainty about future income expectations, the rational choice for micro-individuals is not to increase consumption but to activate a “defensive mode”—boosting savings, cutting non-essential spending, and opting for early mortgage repayment (shrinking the balance sheet). However, when everyone in society simultaneously chooses to “deleverage,” it macroeconomically evolves into insufficient aggregate demand, declining corporate profits, and employment pressure, which in turn exacerbates asset price declines. This is the “negative spiral” that the authorities are highly vigilant about and have now officially set out to break.

Deep Analysis: The “Three-Dimensional Positioning” of Real Estate in Repairing Balance Sheets

The *Qiushi* article tightly links “repairing household balance sheets” with “stabilizing the real estate market,” conveying three independent and highly pragmatic underlying reassessment logics:

• Reshaping the Core Logic: Stabilizing Consumption Requires First Stabilizing Assets
• Limitations of Past Approaches: For a long time, policies to boost consumption focused on the flow side, such as issuing consumption coupons or providing subsidies for “trade-ins” of cars or home appliances. However, for households, these policies stimulate “marginal micro-expenditures” but cannot reverse the fear of spending caused by “macro wealth shrinkage.”
• The “Anchoring Effect” of the Asset Side: As the largest asset package for Chinese households, the signaling significance of housing price fluctuations far outweighs that of consumption coupons. Only by clearly stabilizing the price of this largest asset class—real estate—through policy, and halting the illusion of continuous wealth depreciation, can the bleeding of the household sector’s balance sheet stop, and consumer confidence gain support from the ground up.
• Restructuring Supply and Demand: From “Overall Shortage” to “Stock Differentiation”
• The End of the Aggregate Era: Currently, the per capita housing floor area in China’s urban areas has reached a relatively high level, with households owning an average of over 1.1 homes. The nationwide “era of housing shortage” is over. This means that the logic of trying to drive a nationwide rise in housing prices through aggregate flooding, thereby achieving “per capita balance sheet repair,” has completely failed.
• A Major Reshuffling of Asset Quality: Future repair will be highly asymmetric. Only “good houses” located in core areas of big cities with quality amenities and high living standards will possess the function of asset anchoring, becoming positive assets for balance sheet repair. In contrast, a large number of suburban, old, small, and low-quality properties lacking population and industrial support will continue to have their financial attributes stripped away, reverting to pure residential consumer goods.
• Policy Mechanism Leap: From “Localized Hemostasis” to “State-Backed Underwriting”
• Diminishing Marginal Returns of Traditional Tools: Past policies like lowering down payment ratios, removing purchase restrictions, and cutting mortgage rates essentially encouraged residents to continue “leveraging up” to buy homes. However, against the backdrop of damaged balance sheets and residents actively deleveraging, the marginal effects of traditional supply-side and demand-side stimulus policies are diminishing.
• Synergy of Big Fiscal and Big Finance: To truly stabilize real estate and repair balance sheets, policy is shifting towards state-backed entities entering the market to “underwrite existing stock.” By having local governments or state-owned enterprises purchase existing commercial housing in bulk to convert into affordable housing, this can not only directly “stop the bleeding” for high-inventory developers and the second-hand market but also, through government credit endorsement, build a solid defense line for the asset prices of the entire society.

Independent Media Reflection: Three Hard Questions Facing the Industry in the Second Half of the Year

As a real estate and financial media outlet, we must abandon past grand narratives and binary optimism, calmly examining the deep-seated pain points behind this “balance sheet defense battle” from an independent perspective:

• Question One: Rebalancing Leverage Ratios—Where Will the Money Come From?
• Repairing balance sheets essentially involves two paths: either assets appreciate or liabilities decrease. Given that the asset side cannot return to an era of skyrocketing prices, the key is how to smoothly and safely reduce residents’ debt burden.
• Higher-level financial innovation may be needed in the future. For example, will there be further substantial cuts to existing mortgage rates, converting the interest burden from past high rates into disposable cash flow for residents? Will fiscal measures be used to implement targeted debt relief or interest subsidies for low- and middle-income homebuyers? This tests the fiscal maneuvering capability of top-level design.
• Question Two: How to Break the Singularity of Property Income?
• Chinese residents have long faced a major structural flaw: over 50% of disposable income is highly dependent on wage income, while the proportion of net property income—representing the ability to “make money from money”—is extremely low.
• Now that the real estate “wealth amplifier” has stalled, repairing household balance sheets cannot rely solely on property. As the *Qiushi* article also mentions “promoting the healthy and stable development of the capital market,” establishing a stock market with long-term profit-making potential and a positive wealth feedback loop, providing residents with a second wealth anchor besides real estate, is a necessary path to achieving diversified balance sheet repair.
• Question Three: How to Balance “Housing is for Living, Not for Speculation” with “Stabilizing Asset Prices”?
• This may be the most delicate policy balancing act in the coming years. Policy must prevent asset prices from falling too quickly, which could trigger systemic financial risks and a consumption spiral, while resolutely avoiding the old path of reigniting speculation and inflating asset bubbles.
• This implies that future real estate policy will be extremely precise and restrained. So-called “stabilization” means controlling prices within a reasonable range with manageable fluctuations. By using “time to exchange for space”—allowing time to pass, economic growth, and gradual increases in residents’ incomes to slowly digest the accumulated valuation premiums of the past—a soft landing for balance sheets can be achieved.

Conclusion

The core historical value of the *Qiushi* article in openly addressing and discussing household balance sheets lies in completing a correction of major policies at the national macro-control level. It tells the market that the vision of macro policy is no longer limited to preventing risks in individual enterprises or local government debt, but has truly entered the deep water zone concerning the wealth safety of every household and every micro-individual.

This “silent defense battle” for China’s household balance sheets has only just lifted its most critical curtain. For the real estate industry, the dividends of unchecked growth have completely disappeared. However, a new era centered on “protecting high-quality assets and safely repairing balance sheets” in the stock market has only just begun.