The country's prospects for economic growth face uncertainties in the current environment, Yin said. Ensuring continued economic growth has become a major task for the government, which hopes to spur investment by stabilizing the real estate market.

The government's new policies stress "investment" rather than "market boom" to the delight of developers, Yin said. While China's exports have declined in light of the global financial crisis, promoting investment is the most effective way for the government to regulate economic growth. Increasing housing expenditures for low-income residents would not only promote investment, but also ensure that citizens would live better lives.

Zhu Zhongyi, Vice Chairman of the China Real Estate Association, told China News Agency that the government put the new policies in place specifically to ensure the stable development of the entire real estate industry and national economy rather than to maintain high housing prices, solve the fiscal problems of local governments or rescue real estate companies.

In order to better resuscitate the real estate market, the Central Government has not adopted a single solution, but has allowed local governments to formulate policies according to local conditions. This means that local governments will have the final say about how to rescue their own real estate markets.

Qiu Baoxing, Vice Minister of Housing and Urban-Rural Development, told the China Mayor Forum in Shenzhen on October 18 that the Central Government should give some freedom to local governments in terms of rescuing the real estate market.

Acclaim and criticism

Most real estate developers appear to be applauding the government's new policies.

"Spring for the real estate industry will come soon," Hui Wing Mau, Chairman of Shimao Group, told Xinhua News Agency.

Nie Meisheng, Director of the China Real Estate Chamber of Commerce of All-China Federation of Industry and Commerce, told Beijing Review that the real estate industry once again could promote investment and stable economic growth as it did between 2000 and 2003.

But not all are in favor of the government's new policies. Chen Lin, Director of the Institute for Real Estate of School of Economics and Management at Guangzhou University, told Beijing Review that the real estate market was not in such a predicament that it needed rescuing. He pointed out that increases and decreases in housing prices are the rules of the market. Before 2005, home prices in China rose rapidly. Since then, the state has introduced various macro-control measures but failed to curb housing price increases. Just one or two new policies would not be enough to turn around the current sluggish real estate market, Chen said. Because it is normal market behavior for home prices, like other kinds of investments, to fluctuate, too much government interference would disrupt the market, he said.

Yi Xianrong, a researcher at the Institute of Finance and Banking at CASS, told Beijing Review that a rise in domestic demand for homes should be based on prices that most people could afford. If housing prices remained at their current levels, most citizens would not be able to buy new homes, dashing the government's hopes of increasing domestic demand. Meanwhile, the conditions of the current real estate market have taken a turn for the worse in light of the global financial crisis and shrinking stock market, so that the government's rescue efforts would produce limited effects, and the real estate market would remain in a downturn, he said.

Yi also said previous price hikes for new homes are above and beyond their fair market value, and it would be a near-sighted approach to attempt to manipulate the market through too much interference.