Michael Spence on China: fix property, boost confidence – tariffs are secondary

Restoring confidence and stabilising the property market are “significantly more important” for China than the ramifications of tariffs, a Nobel laureate in economics said while warning of financial risks to Chinese households.

Michael Spence, who won the Nobel Prize in 2001, made the remarks at the Hongqiao International Economic Forum in Shanghai on Thursday, during a panel discussion on China’s pathway to revitalise consumption.

While acknowledging that Beijing needs to “seriously” address tariff frictions, the 82-year-old Canadian-American said such external factors were of “secondary importance with respect to restoring momentum in the Chinese economy”.

“Stabilisation of the real estate sector, the financial sector that’s related to it, [and] restoring confidence and momentum are significantly more important than whatever impacts the tariffs are having,” said Spence, who is also a Philip H. Knight professor and dean emeritus at Stanford University’s Graduate School of Business.

His comments came as the world’s second-largest economy prepares to enter its 15th five-year phase (2026-2030), a period in which external risks such as tensions with the United States, as well as domestic headwinds – including sluggish demand, a prolonged property downturn and persistent deflationary pressures – are expected to test Beijing’s policymaking.

During the forum – a high-level dialogue platform that runs alongside the China International Import Expo to discuss and promote global economic cooperation, trade and investment liberalisation – Spence also stressed the need for China to avoid “damage to household balance sheets”, which have been eroded in part by falling property values.