At the fifth China Original Economics Forum and Economists & Entrepreneurs Summit held on September 6, Meng Xiaosu, academic advisor to the China Finance 40 Forum, highlighted that institutional economics serves as a critical theoretical foundation for economic advancement. He emphasized that the core purpose of economics is to support economic and social development, making the optimization of China's economic policies and the implementation of institutional innovation based on national conditions the most valuable form of economic innovation practice.

Meng pointed out that the current domestic economy is under pressure, with the primary drag factor being the prolonged downturn in the real estate market. Commenting on the recently introduced "8·28" real estate financial policy package, he noted that the release of eight policy documents in a single day underscores the policymakers' firm commitment to stabilizing the property market with a "one-time, full-measure" approach. Among these, the formal inclusion of measures to suspend foreclosure auctions, which he had advocated for two years, carries significant weight. Stabilizing the foreclosure market is a key lever for restoring confidence in the housing sector and preventing financial risks.

Building on the foundation of stabilizing the real estate market, Meng elaborated on the core strategy to resolve local government debt, proposing the use of REITs institutional innovation to address the debt challenges of urban investment platforms. He explained that the fundamental logic of REITs lies in asset socialization rather than privatization. By bundling existing infrastructure assets such as highways, industrial parks, and affordable rental housing into standardized financial products for public issuance, pension funds, insurance institutions, and retail investors can all participate. This transforms asset holders from government platforms to public shareholders. Urban investment companies can utilize REITs to revitalize existing assets, recover capital, and repay existing debts, ensuring a smooth withdrawal of government credit and perfectly aligning with current debt resolution policy requirements.

Meng proposed that to make REITs a core tool for resolving the 68 trillion yuan urban investment debt, institutional innovation must advance in two major dimensions. First, the introduction of internationally mainstream corporate-type REITs would address the shortcomings of the current contract-type REITs, such as lengthy governance chains, difficult capital expansion, and limited scale. Leveraging advantages like efficient decision-making, clear rights and responsibilities, and flexible capital operations could strengthen the REITs market. Additionally, drawing on international "golden share" mechanisms could preserve government oversight of major matters while upholding the public welfare nature of public assets.

Second, innovating the government procurement model to address asset yield shortfalls is essential. Referencing mature overseas experience with government-paid REITs, methods such as sale-and-leaseback and government procurement of services could enhance returns on public welfare infrastructure assets like public rental housing, roads, bridges, and pipelines. This would meet REITs listing conditions, unlocking a vast pool of low-yield existing assets.

Meng summarized that China possesses the world's largest base of infrastructure assets, the most abundant household savings, and the most urgent needs for revitalizing existing assets and resolving debt. These three advantages lay a solid foundation for building the world's largest REITs market. After two decades of development, REITs have entered a critical stage of institutional innovation and scale expansion, poised to become a core financial tool for resolving trillion-level local debt, revitalizing existing assets, and serving the real economy. Looking ahead, continued advancement in institutional economics and financial system reform, combined with collaborative efforts from academia and industry, will be necessary to realize the successful implementation of the REITs socialization debt-resolution model and achieve a landmark outcome in China's economic institutional innovation.