As we enter the second quarter of the year, the production and operation of Chinese enterprises have gradually improved. Among them, there has only been a slight pull back in the manufacturing industry, after a sharp rebound in the resumption of production in April. The new orders index has stopped falling and even rebounded, which help form a basis for recovery in the second half of the year, despite not much significant improvement with the Coronavirus epidemic in the European and American markets. In fact, the risk of a second round of economic shocks has not reduced. Amidst the global epidemic, severe impact on the economy and a continued shrinkage demand in the foreign market, there are uncertainties in the development of the global economy.
Meanwhile, the Government Work Report 2020 for Mainland China proceeded smoothly at the end of May. We believe the overall property prices will become more stable this year, since the government does not want to see significant rally in the overall property price; whilst first- and second-tier cities will see more stable growth in the coming quarter.
In addition, the post meeting report suggested that 39,000 old towns should be renovated which will involve seven million households, a significant increase from last year. For the remainder of 2020, Beijing will start eighty projects, have completed fifty comprehensive old community renovation projects, and have spent RMB 1.28 billion for fixed assets investment. Shanghai also has plans to complete the renovation of old towns of fifty-five thousand square metres, affecting 28,000 households in the central urban area. Promoting a new type of urbanisation in depth will increase employment opportunities on one hand, and on the other hand, it will help the central cities and urban clusters play an inclusive role in cultivating industries. By tracking the improvement of residents’ living conditions, there could be an expansion in domestic demand, which could stimulate demand from property service companies going forward.