Recently, the State Council of the Chinese Communist Party (CCP) issued a revised “Regulations on the Administration of Housing Provident Fund,” which transferred the authority to determine the deposit and loan interest rates of the housing provident fund, with a total balance of 10.93 trillion yuan, directly to the State Council. The revised regulations also expanded the scope of fund utilization, allowing it to be used for purchasing policy financial bonds, among other purposes.
Analysis suggests that against the backdrop of a continued downturn in China’s real estate market, pressure on local finances, and weak domestic demand, the CCP hopes to revitalize the stagnant housing provident fund capital, stimulate housing-related consumption, and provide the government with greater flexibility to mobilize and use the massive fund. In essence, it amounts to seizing the interests of the people for its own benefit.
On August 18, 2026, the State Council issued a State Council Order signed by Premier Li Keqiang, titled “Decision of the State Council on Amending the Regulations on the Administration of Housing Provident Fund,” consisting of 20 articles, which will officially come into effect on September 20, 2026.
The original regulations were first issued on April 3, 1999, and have been revised twice in 2002 and 2019, with this being the third amendment.
Amid a deteriorating economic environment in China, particularly with the continued decline of the real estate market, the authorities have once again revised the “Regulations on the Administration of Housing Provident Fund,” sparking attention and discussions on the content and objectives of the amendments.
While the 2019 version stipulated that “the deposit and loan interest rates of the housing provident fund shall be proposed by the People’s Bank of China, solicited for opinions from the competent construction administrative department of the State Council, and approved by the State Council,” the newly revised sixth article now simplifies it to “the deposit and loan interest rates of the housing provident fund shall be determined by the State Council.”
The provision in the 2019 version’s article 28, which allowed the use of the housing provident fund for purchasing national debt, has been modified to permit its use for purchasing national debt and policy financial bonds.
According to China’s “National Housing Provident Fund Annual Report 2024,” by the end of 2024, the total cumulative balance of the Chinese housing provident fund reached 32.79 trillion yuan, with a remaining balance of 10.93 trillion yuan.
Professor Xie Tian from the University of South Carolina pointed out to Epoch Times, “The key point of this decision is the shift of the decision-making power on the deposit and loan interest rates of the housing provident fund to the State Council, as well as the fund’s expansion to include the purchase of national debt and policy financial bonds.”
Xie Tian emphasized that these changes are actually detrimental to the Chinese people, giving the government more power over them.
“In normal and Western countries, interest rates are decided by an independent central bank, not the government. Allowing the CCP government to decide on interest rates is like letting a mouse guard the grain, which is unreasonable. In fact, China does not have an independent central bank to determine interest rates,” he said.
Xie Tian noted that the government can now decide on interest rates and not just purchase national debt but also policy financial bonds. This means that the government can take money when needed, issue new bonds with rates of their choosing, essentially granting itself more power.
He stressed that this amendment effectively gives the government more power, depriving individuals of their privately contributed assets and their control over them.
The new regulations expand the coverage of housing provident fund contributions to include individual businesses, part-time workers, and other flexible employees. It also relaxes withdrawal conditions, expanding the usage to include “purchase, rental, renovation, and maintenance” of housing, allowing for a wider range of fund applications.
Xie Tian believes that the new regulations change the original housing financing tool into covering the entire residential lifecycle from “purchase, rental, renovation, maintenance,” a practice which is not entirely reasonable and is unfavorable for the maintenance and security of ordinary people’s housing provident funds.
Chinese financial expert Xu Zhen believes that the CCP’s modification of the “Regulations on the Administration of Housing Provident Fund” this time is mainly for three purposes.
Firstly, in an economic downturn cycle, the CCP aims to revitalize the provident fund, converting the over 10 trillion yuan of housing provident fund deposits into actively used funds to stimulate housing-related consumption chains such as expanding from the traditional “purchasing, renting” to housing renovations or expenses like property maintenance, winter heating costs, or parking space purchases.
Xu Zhen noted that the second objective is to increase income and reduce expenditure. On one hand, widening the sources of the provident fund to include flexible workers to cut off the interest rate spread (1.5%) between the provident fund deposit rate and bank savings/term rates.
He said, “This interest rate spread is a substantial burden for provident fund centers and local finance; the State Council’s acquisition is paving the way for future interest rate cuts. For the people, it means reduced interest income. In other words, the CCP is taking money from the people’s pockets.”
The CCP’s third objective is to use individual provident funds for public purposes. The provident fund’s pool might be allowed to purchase policy financial bonds, channeling low-cost funds to policy financial institutions, indirectly supporting projects like affordable housing construction and urban village renovations, expanding the fund from “individual housing purchases” to “national housing construction.”
With the increased boundaries of fund utilization, regulatory oversight and conflicts of interest have become a focal point of concern. The question arises, when over 10 trillion yuan of long-term housing funds are given a wider asset utilization space and interest rate decision-making power further concentrates at the State Council, how can fund use be ensured to always prioritize depositors’ interests and fund security?
Some viewpoints suggest that the new regulations transform the housing provident fund system from a previous single housing financing tool to a comprehensive housing security and consumption support platform covering residents’ entire residential lifecycle from “purchase, rental, renovation, maintenance.” Consequently, some dormant provident funds may be accelerated for activation.
Xie Tian believes that the CCP seems to want to rapidly activate dormant provident funds, allowing the government to have more power to mobilize more funds for its purposes. The CCP clearly aims to pave the way for expanded financial avenues, enabling the government to have more control over more provident funds.
“The newly introduced provident fund policy is intended to stimulate the real estate market and reduce inventory. However, I believe its contribution to destocking the real estate market or revitalizing real estate market activity is limited,” Xie Tian said.
Xu Zhen stated that activating the provident fund has limited effectiveness in boosting domestic demand. The withdrawals for renovations, property maintenance release existing funds rather than adding purchasing power, essentially converting “locked-in account money” into “spendable money.” While it may boost related consumption like home décor materials and household services, it is challenging to compare in scale with new home sales.
Against the backdrop of a continuous economic downturn, strained local finances, and particularly with the ongoing degradation of the real estate market and high housing inventory in China, the CCP’s revision of the “Regulations on the Administration of Housing Provident Fund” is also seen as a move to potentially drive destocking in the real estate sector.
In response, Xu Zhen believes that the direct impact of destocking is limited. “This decision revision did not make significant changes in ‘housing withdrawal quotas’ or ‘loan limits.’ The focus is actually on rentals, renovations, maintenance, not housing purchases, so it may not directly stimulate new home sales significantly.”
Xie Tian pointed out that the revision of the “Regulations on the Administration of Housing Provident Fund” reflects the current state of economic decline in China, with a lack of government funding and financial constraints. “When the government faces a large deficit and an urgent need for cash flow, they targeted the people’s housing provident fund.”
Xie Tian emphasized, “In the past, there have been instances of the Chinese people’s medical insurance funds and pension funds being misused, and now the CCP is eyeing the housing provident fund.” “The CCP government may use this money to invest in national debt or prepare for government financing. In other words, it is allowing the government to better utilize the money taken from the people to assist in its operations.”