China Launches $138 Billion Rescue Fund to Tackle Housing Crisis, But Wall Street Is Skeptical

Beijing is rolling out its most aggressive measure yet to combat the nation's severe property crisis, announcing a 1 trillion yuan ($138 billion) national fund to buy unsold homes from distressed developers. While the move aims to put a floor under plunging prices, analysts warn it's a fraction of what's needed to solve the multi-trillion-dollar problem.

How the State-Backed Bailout Works

According to a statement from China's State Council on December 23, 2025, the new fund will acquire empty, unsold residential properties and convert them into affordable housing. The program will be capitalized with seed money from the People's Bank of China (PBOC) along with contributions from local governments.

The intervention comes as the property sector, a former engine of economic growth, continues to sputter. Official data shows new home prices have cratered by nearly 30% since their 2021 peak. The crisis has already led to defaults by giants like Evergrande and Country Garden, spooking global investors.

Wall Street: 'A Drop in the Bucket'

Despite the headline number, the reaction from international analysts has been lukewarm. A Goldman Sachs report called the fund "a step in the right direction, but insufficient in scale." The bank estimates China's total unsold housing inventory is valued at a staggering 30 to 40 trillion yuan (roughly $4.2 to $5.6 trillion).

Morgan Stanley echoed the concern, pointing to a critical execution risk: pricing. "The government says it will buy at 'reasonable prices,' but developers need cash and may be unwilling to sell at the steep discounts the state will likely demand," their note to clients read. Agreeing on a price that satisfies both sides without further crashing asset values will be a major hurdle.