China desperately needs low-income migrant workers to buy homes and save the economy

Posted by K R on

In the past few years, China has relied on its astonishingly high number of rural migrant workers to pour into factories and construction sites and fuel its economy. Now, migrant workers are again seen as a solution for sustaining the country’s economic growth—this time by buying houses in China’s cities.

China has taken a series of measures in recent years to encourage white-collar workers to buy into its housing glut. But now the upper segment of the market is becoming saturated, and the government has no alternative but to turn to its low-income residents if it wants to avoid an economic meltdown.

“You come to a point where you cannot ignore the lower-end demand anymore because there is no demand at the higher end,” Rosealea Yao, a China investment analyst for research firm Gavekal Dragonomics, told Quartz. “That will tank your construction volume. And if your construction volume is falling too fast for too long, your economy is collapsing because one-third of GDP growth is coming from real estate and construction.”

“This is why you see China’s growth is slowing so fast,” she added. “From the government perspective, it’s not just about being nice to the low-income group.”

Read More: Quartz

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