China’s largest cities have suspended all land auctions for the last two months after recent central government directives failed to rein in prices, in a setback for Chinese leader Xi Jinping’s campaign to reduce social inequality, reports the Financial Times. The rules were introduced as part of Xi’s efforts to promote “common prosperity” by clamping down on the high property costs borne by middle-class families, and were intended to lower demand and runaway house prices. But they appear to have had the opposite effect, driving up real estate costs.
Initially, regulations outlined by the Ministry of Natural Resources in February stipulated that 22 cities, including Beijing and Shanghai, should sell more land this year than had been sold annually on average between 2016 and 2020.
Dozens of auctions were originally scheduled for 2021 but, due to a cascade of high winning bids, this number was reduced to three larger-scale auctions, intended to reduce bidding values by creating the impression of “abundant supply.” The subsequent failure of this tactic led to the suspension of all auctions in July and August.