Editor's note: Lin G. is a CGTN economic commentator. The views expressed in this article are the author's own and do not necessarily reflect those of CGTN.

Many global observers still analyze China's property sector through the lens of crisis. Yet this interpretation overlooks a deeper structural transition. At this year's national two sessions -- the annual meetings of China's top legislature and top political advisory body --  Chinese policymakers have emphasized the country's shift toward a new stage of urbanization, where the focus is no longer on expanding cities as fast as possible, but on improving the quality and structure of urban development.

Seen in this context, the changes in China's property market are part of a broader transition. As China moves away from the era of rapid urban expansion, its real estate sector is also adjusting -- from a model driven by sheer scale to one increasingly focused on stability, structure, and higher-quality development.

From rapid urbanization to 'new-type urbanization'

China's real estate transition is closely tied to a broader shift in its urban development. For decades, China has experienced a period of rapid urbanization. However, this phase is now evolving into what policymakers describe as "new-type urbanization."

The shift reflects a fundamental structural reality. By 2025, China's resident urbanization rate had reached 67.9%. The room for continued increases has naturally become more limited. The strategy is therefore moving from a stage of rapid expansion to one focused on structural optimization.

This direction has been reaffirmed in the Government Work Report. The year 2026 marks the beginning of the country's 15th Five-Year Plan (2026-30), and new-type urbanization remains one of the important policy directions for the coming five years. In fact, this policy orientation had already begun during the 14th Five-Year Plan period (2021-25).

The core idea behind new-type urbanization is not simply to continue expanding cities outward in a "spreading" pattern. The new approach places greater emphasis on optimizing urban structures, improving urban planning, and strengthening the quality of development.

Equally important is the changing pattern of population mobility. In the earlier stage of urbanization, the dominant trend was the movement of people from rural areas into cities. In the coming stage, however, population mobility will increasingly occur within the urban system itself. Population flows may move from smaller towns toward larger metropolitan areas or urban clusters.

A new development model for the real estate sector

Against this macro background, China's real estate sector is also undergoing a corresponding transformation. The industry is also shifting from large-scale expansion to high-quality development.

In earlier years, China's property market experienced extremely rapid growth. The expansion speed eventually reached a peak, and the overall scale of the sector grew enormously. Under these conditions, continuing to rely on sheer expansion is neither necessary nor sustainable.

High-quality development in the housing sector is therefore focusing on several key directions. One is the construction of "good housing" --higher-quality residential projects designed to meet people's demand for improved living conditions.

A second direction is to provide affordable housing through the acquisition of existing units, particularly apartments in relatively older residential communities, which can be converted into affordable housing. This approach allows existing housing resources to be used more efficiently.

A third element is urban renewal, which includes redevelopment projects such as demolition and rebuilding, or reconstruction on the original site, aimed at upgrading older urban neighborhoods.

Why today's adjustment is different from the past

The ongoing adjustment in China's property sector has attracted considerable international attention. Many foreign media outlets have focused on the financial difficulties faced by certain developers and interpreted these events as evidence of major systemic problems.

However, this perspective often focuses only on surface-level outcomes without examining the underlying causes. One important factor behind the difficulties of some developers was their extremely rapid expansion strategies in earlier years, particularly among private real estate companies.

Ten years ago, China's property market also faced high housing inventory, prompting policy action. In 2016, the Government Work Report emphasized the need to reduce housing inventory. Following the 2016 policy push, China's property market experienced a rapid price surge during 2017 and 2018, and many private developers interpreted this as a major opportunity to expand aggressively.

While rapid expansion can be a legitimate corporate strategy for an individual firm, problems arise when most large developers simultaneously pursue growth at extremely high speeds. Several years later, the cumulative effects of that expansion contributed to the supply imbalances that later emerged.

This year, for the first time in a decade, the goal of reducing housing inventory was once again highlighted in the Government Work Report. The situation today, however, is different. After several years of adjustment since 2022, the structure of China's real estate industry has changed significantly. Among the country's leading developers, the share of private companies has declined sharply. Some private developers have exited the market, while others have undergone mergers, restructuring, or even been taken over by state-owned capital.

Although precise statistics may vary, the general picture is clear. A few years ago, private developers accounted for more than half of the leading real estate companies. Today, however, the leading positions in the industry are increasingly dominated by state-owned enterprises.

This shift matters because the strategic behavior of these two types of firms tends to differ. Private developers are more willing to take risks in pursuit of rapid growth. State-owned developers, by contrast, tend to adopt more stable and cautious strategies. Moreover, state-owned companies are more directly influenced by government policy guidance. As a result, the likelihood of a return to the kind of disorderly expansion seen in previous years is much lower.

The changes in China's real estate sector therefore represent a structural recalibration. As China's urban development enters a stage of structural adjustment, its property market is evolving accordingly -- from a model defined by rapid expansion to one guided by quality and long-term sustainability.