China's policy makers strive to boost the country's housing market by easing restrictions on home purchases and mortgage lending, says Aidan Yao, senior emerging Asia economist at AXA Investment Managers. After a favourable second quarter, China's economy met headwinds driven by a correction in the country's housing market, he says in an interview with The Asset.

The slowdown reverberated through the economy, affecting upstream sectors: manufacturers of cement and steel, but also downstream: those of home appliances and vehicles. Further reforms of the hukou (household registration) system and of local government finance are expected to accelerate urbanization and mitigate the risk of economic downturn.