Concerned about the hike in real estate prices, the Chinese government this April introduced measures, including a higher down-payment ratio for housing purchases, to restrain the increase in real estate transactions. These measures are expected to place added downward pressure on economic activity to a certain extent by slowing the pace of growth in fixed asset investments.
This would be achieved by restraining the increase in real estate transactions and, at the same time, decelerating production growth, particularly of steel and other construction-related materials. As a result, the balance between orders and inventories in the manufacturing sector is improving at a slower pace, and the pace of economic expansion is expected to decelerate for a while.