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Recently, many regions issued a series of policies to boost the real estate sector. However, industry data showed that the real estate market has not yet been reinvigorated as expected. How do you see this phenomenon, and what are your predictions for future trends in the real estate sector? Thank you.

Sheng Laiyun:

Thank you. Everyone is very concerned about the development and recovery of the real estate sector. Real estate is indeed an essential pillar of the national economy, and its industry chain is relatively long, making it significantly influential on economic growth and operation. As for the real estate economy and its development, I would like to stress several points.

First, we need to recognize that adjustments in the real estate sector are conducive to the industry's transformation toward high-quality development. In China, real estate has maintained high growth for nearly 20 years, starting from the housing commercialization reform in 2003 and through to 2020. I would like to share some data with you. During the 2003-2020 period, we saw an average annual growth of 19.9% in real estate investment, 10.8% in sales area of commercial housing, and 20.3% in commercial housing sales. The data show that the real estate industry sustained high-speed growth from 2003 to 2020. Some scholars have even noted that, in terms of real estate development, China achieved what developed countries took over a century to do in less than 20 years. Therefore, the sustained high-speed expansion of the real estate industry made important contributions to the rapid and medium-high growth of China's economy in that period. However, like other industries, real estate cannot always sustain high growth. After a certain stage, such adjustments are normal and beneficial for eliminating outdated production capacity and optimizing structure, especially for high-quality development of the real estate industry. So, the current adjustment is beneficial for future development.

Second, there has been solid support for high-quality development of the real estate sector. In terms of China's development stage, we are still in the phase of economic transformation, upgrading, and high-quality development. Our per capita GDP has just surpassed $12,000. The urbanization rate of the permanent population is 65.2%, while that of the registered population is only 47.7%. Therefore, there is significant room for improvement in both the quantity and quality of urbanization. This means that our rigid and improvement-oriented housing demands are still significant. Additionally, we have achieved a comprehensively well-off society, with a per capita housing area of around 41 square meters. However, they are mostly small and medium-sized housing types, and as people's living standards improve, there is significant potential for improvement-oriented housing demand. So, based on these fundamentals, we believe that there is still solid support for high-quality and sustainable development of the real estate sector. It's not reasonable that people would lose confidence when the real estate is adjusted. That is also not in line with the changes in China's economic development stage.

Thirdly, since last year, the CPC Central Committee and the State Council have attached great importance to the sector and introduced a series of optimized policies to stabilize the real estate market. Just now, the reporter also mentioned the many policies in place, and their implementation will take a while. The initial implementation has made some positive effects. I will give you some more details. As for the real estate investment situation I just mentioned, it's clear that real estate investment continues to decline. September data show a month-on-month improvement. For example, the sales area of commercial housing had a negative growth rate of 10.2% in September, but it improved by 2 percentage points compared to August. The new construction area in the real estate sector also saw a narrowing of the decline in September, and it was a significant narrowing. Also we have data on the transaction volume of commercial housing in 70 large and medium-sized cities in September. The total transactions of new homes and second-hand housing turned positive in September, with a month-on-month increase of 2.8%. It marks the first time that they showed positive growth since April, after five consecutive months of decline. Therefore, based on these data, we believe that the optimized policies will have a continuous positive effect on the real estate sector. Of course, it still takes a while to see how these policies work, since the real estate industry is generally in a stage of adjustment. Therefore, we must better implement the policies at a later stage. Thank you.