While it is encouraging that last week’s unexpected Politburo meeting acknowledged the depth of the problems within the country’s property sector and the need to stop it from falling further, making it easier and cheaper for wealthy buyers in tier-one cities to buy new or second homes won’t resolve the larger problem.

China has an estimated 90 million or more empty homes and more than 10 million unfinished apartments, most of them in second-, third- and fourth-tier cities. While the tier-one cities might continue to attract more people even as China’s population continues to shrink, it exacerbates the challenges within the lesser cities and regions.

Beijing tried to address that issue earlier this year by offering low-cost finance to local governments and state-owned enterprises so that they could buy empty apartments for affordable housing. With property prices still in freefall, there were few takers.

An obvious, if expensive, “solution” to the property crisis would be for the central government, which has low debts of its own (most of China’s significant debt burden is held within its local governments and state-owned enterprises) to acquire a major proportion of the excess property stock itself and use it for social housing.

The cost of making a meaningful dent in that excess inventory would probably amount to the equivalent of hundreds of billions of dollars, perhaps more than half a trillion.

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As noted last week, so far what we’ve seen in response to an economy that is flagging has come from the PBOC. Monetary policy is, so far, carrying the full weight of the efforts to stimulate activity, with fiscal policy missing in action. The PBOC can’t reflate the economy on its own.

There is a National People’s Congress late this month where that may change, with party officials hinting over the past few days at the prospect of fiscal stimulus.

Ahead of this week’s holiday to mark the 75th anniversary of the founding of the People’s Republic of China, Xi Jinping made it clear that he, perhaps belatedly, recognises that China’s economy is experiencing a difficult and potentially pivotal moment.

“We must be mindful of potential dangers and be prepared for rainy days,” he said in a speech on Monday to commemorate the anniversary.

“The road ahead cannot be smooth. There will be obstacles and difficulties, even major challenges like surging torrents and storms.”

Even with the monetary stimulus, China may miss its growth target for this year of “about 5 per cent” but, more threatening, it has been experiencing disinflation and risks falling into the debt and deflation trap that engulfed Japan’s economy in the 1990s.

It needs policies that break what is now almost an entrenched cycle of excess savings and weak consumption from risk-averse households, massive overcapacity in its industrial base and an over-reliance on an export-led strategy that is running into increasing resistance from China’s trade partners.

Halting the fall in the property market is a prerequisite for stabilising the domestic economy and consumer confidence. Lifting consumption, whether via the cash handouts to households that Xi disdains or by a massive injection of funds into social welfare, health and education, is another.

Giving China’s entrepreneurial private sector – which is far more productive than the state-owned sector – more encouragement and a less coercive environment would be helpful.

The authorities will be hoping that the PBOC’s intervention produces both psychological and real effects for households whose major sources of wealth – property and shares – have been decimated over the past few years.

The current Beijing-driven focus on advanced manufacturing, which has resulted in overcapacity and a big increase in export volumes but falling export prices (hence the pushback from its trade partners), isn’t going to stimulate domestic consumer activity.

At last week’s Politburo meeting, there was a reference to the need to make “countercyclical adjustments” through fiscal and monetary policies and to maintain fiscal expenditures. Government spending has been falling recently, adding to the drag on the economy from the property market and consumer caution.

Whether the party and Xi, in particular, have the stomach for the “Big Bang” fiscal stimulus the economy seems to need is questionable. To date, the approach has been piecemeal – a large number of relatively modest measures that have generally had little impact.

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While Xi seems to believe that fiscal stimulus is wasteful and its recipients lazy, until last week the economy was tracking towards something quite bleak.

The PBOC has now, at least for the moment, ended the sharemarket rout and there are some very tentative and faint signs of life within the tier-one city property markets.

It will now be up to Xi and his senior policymakers to seize that moment and make significant structural changes to their economy – and to Xi’s economic strategies – or miss the opportunity to arrest what might otherwise become an entrenched decline.