China has taken unprecedented steps to bolster its vital but troubled real estate sector, suffering from a severe crisis since 2020 following the collapse of major construction firms. These measures have revived stock exchanges, despite industrial activity contracting for the fifth consecutive month in September.

Historically, the construction and housing sector comprised more than a quarter of China's GDP, the world's second-largest economy. However, this sector has faced severe repercussions due to Beijing's stringent loan acquisition policies for real estate development companies, pushing giants like Evergrande and Country Garden to the brink of bankruptcy.

Amidst halted construction projects, economic slowdown, and falling property values, many Chinese citizens are now reluctant to invest in real estate. To stimulate the ailing sector, several cities announced on Sunday the lifting of some local constraints, which were seen as hurdles to property purchases.

For instance, in Guangzhou (southern China), a city of around 19 million people, individuals were previously prohibited from purchasing more than two homes to prevent property speculation during the sector's boom years. This restriction was lifted as of Monday, and the city's real estate market is no longer limited to its residents.

Similarly, Shenzhen (southern China), with a population of about 18 million, implemented comparable measures, though only in the city's outskirts. Meanwhile, Shanghai reduced the initial down payment required for first-home purchases in the economic hub, home to around 25 million people.

In parallel, authorities announced on Sunday the reduction of mortgage rates required for purchasing primary or secondary residences. These new measures coincided with the Chinese stock markets' rebound on Monday, just days ahead of October 1st, the National Day and the 75th anniversary of the establishment of the People's Republic of China.

Shanghai stock exchange closed up by 8.06%, while Shenzhen's rose by approximately 11%. Additionally, Hong Kong's stock market, which closed later, registered over a 3% increase.

Analyst Yan Yujin of the Shanghai-based specialist office 'E-House' stated, 'Very few people are buying real estate these days.' He explained that if no one is purchasing properties, it will adversely affect consumption and, consequently, economic growth, given the substantial role of the construction sector in China's economy.

Chinese leaders, including President Xi Jinping, acknowledged on Thursday that the economy faces 'new problems.' Official data released on Monday showed that industrial activity in the country contracted once again in September, continuing a trend for the past five months.

The Purchasing Managers' Index (PMI), a measure of industrial activity, stood at 49.8 points according to the National Bureau of Statistics data. This index indicates growth if it surpasses the 50-point threshold, or contraction if it falls below it. Analysts surveyed by Bloomberg had anticipated a more significant contraction at 48.4 points.

In August, this index, based on companies' order books, recorded a contraction of 49.1 points. Last year, China reported one of its weakest growth rates in three decades at 5.2%, according to official figures, which some economists view skeptically due to the underlying economic challenges in the country.

Although this rate might be a target for many developed countries, it remains significantly lower than China's exponential growth over the past three decades, which made it the world's second-largest economy. Authorities continue to forecast a growth rate of around 5% this year, but analysts deem this target optimistic given the myriad obstacles facing the Chinese economy. Growth figures for the third quarter of the year are expected to be released in mid-October.