In a Dilemma: Should You Prioritize Cash Flow or Profit? | CITIC Chengkai Chairman Yang Jin Proposes a New Risk Mitigation Model | 2026 Perspective Annual Forum

This newspaper (chinatimes.net.cn) reporter Zhang Bei Huang Zhinan Shenzhen reports

“The path of transformation may have challenges, but dawn has arrived, and the first light is ahead.” Yang Jin, Party Secretary and Chairman of CITIC Urban Development and Operation Co., Ltd., said during the 2026 Perspective Annual Forum.

Yang Jin straightforwardly stated, “The real estate industry has reached a historic turning point from incremental expansion to quality improvement of stock, and the extensive scale growth model has already failed. In the future, the core competitiveness of real estate companies will shift to six key capabilities: model innovation, product development, and others.”

Facing the industry’s dilemma of “worrying about both advancing and retreating,” Yang Jin systematically disclosed CITIC Urban Development’s “Four New” transformation path centered on “exploring new models, creating new products, applying new technologies, and building new ecosystems.”

New Logic in the Stock Era

“We are now in an unprecedented dilemma,” Yang Jin opened his speech directly, highlighting the survival crisis faced by the entire industry. The core of this dilemma is the ultimate choice that cannot be avoided during a market downturn: preserve cash flow or preserve profits.

In Yang Jin’s words, this dilemma concretizes into the industry’s common current situation. Real estate companies’ funds are heavily tied up in land and property assets. During a market downturn, inventory clearance is hindered. If they do not accelerate discounted sales to recover liquidity, companies risk exploding debts; but if they promote large-scale discounts, the receivables will directly erode profits and report quality, leading to declines in EBITDA, rising leverage, and dual pressures on operations and finances.

Even CITIC Urban Development has not been immune during the industry downturn—between 2022 and 2024, the company experienced consecutive losses due to asset impairments, only returning to profitability in 2025.

“Fix the roof when the sun is shining, not when the rain is pouring,” Yang Jin quoted Guo Guangchang, Chairman of Fosun International, directly stating that this dilemma is not caused by short-term market fluctuations but is an inevitable result of a fundamental restructuring of industry logic.

The Central Urban Work Conference has clarified that China’s urban development has shifted from large-scale incremental expansion to a new stage of stock quality and efficiency improvement. This means the growth logic that supported the real estate industry for the past thirty years has been fundamentally changed.

Yang Jin reviewed the old growth model of the industry. In the past, real estate companies relied on high debt, high leverage, and high turnover to achieve rapid scale expansion. Growth momentum was highly dependent on land dividends and market premiums. The core competitiveness was nothing more than land premiums, housing premiums, and brand premiums.

But in the stock era, this extensive scale growth model has come to an end. The industry’s development focus has shifted entirely to optimizing incremental development and revitalizing stock. The key tracks supported by national policies—urban renewal, shantytown redevelopment, affordable housing construction, and “good housing” development—will become the main battlefield for value creation in the future.

Although the industry is still in a deep adjustment cycle, Yang Jin maintains a clear view of the long-term development. He believes that the three core attributes of the real estate industry have not changed.

“First, it affects financial security; second, it benefits people’s livelihood; third, it links many upstream and downstream industries. The two engines of urbanization and consumption upgrading will continue to drive the industry forward,” Yang Jin further analyzed. Against the backdrop of sustained policy efforts, market expectations have significantly improved compared to one or two years ago. The mainstream industry view is that the market will stabilize by the end of 2026 to early 2027.

More importantly, Yang Jin explicitly outlined the direction for reconstructing the core competitiveness of real estate companies in the new cycle. He frankly stated that future industry competition will no longer be about land acquisition speed and scale but about the company’s “ability to turn stone into gold”—value creation. This is specifically broken down into six core capabilities: model innovation, product development, financial design, resource integration, technological application, and operational efficiency.

“Real estate companies urgently need to transition from developers to comprehensive urban operators,” Yang Jin’s judgment also sets the core direction for CITIC Urban Development’s own transformation practice.

“Four New” Breakthrough

As the core real estate platform of CITIC Group’s new urbanization sector, CITIC Urban Development’s transformation path fully aligns with its fundamental judgment of the new industry cycle.

Relying on CITIC Group’s “finance + industry” integrated advantages, CITIC Urban Development has established a dual-driven business pattern of “development + operation,” focusing on risk mitigation, urban renewal, core asset investment, and high-quality asset operation. With the underlying logic of innovationism, long-termism, productism, and serviceism, it has built the “exploring new models, creating new products, applying new technologies, and building new ecosystems” “Four New” transformation system, precisely responding to the six core capabilities required by the new cycle.

The exploration of new models is the core lever of CITIC Urban Development’s transformation and its key solution to break industry dilemmas. Among them, the most industry benchmark is its innovative “financial support + risk isolation + asset management” risk mitigation model.

Yang Jin detailed the core logic of this model in his speech: First, introduce incremental funds for distressed projects, sourced from incremental credit from existing debt holders, benefit bonds from AMC institutions, and CITIC Urban Development’s own funds; second, establish a special risk isolation structure to ensure that incremental funds operate within the asset package in a closed manner, achieving complete risk separation from the original entity; third, and most critically, CITIC Urban Development takes the lead in managing the project, providing development management capabilities, offering professional services such as construction, supervision, and entrusted operation, to turn incomplete projects into effective assets, ultimately recovering funds through sales, holding, operation, and disposal, completing risk resolution.

This model has been validated at scale within the industry. The rescue cooperation between CITIC Urban Development and Kaisa Group is a typical implementation case of this model.

So far, this risk mitigation model has been implemented in over 30 projects across more than ten cities nationwide, managing assets worth over 200 billion yuan.

The creation of new products is the core carrier for CITIC Urban Development to optimize incremental development and practice the “good housing” orientation. Yang Jin disclosed that CITIC Urban Development has adhered to the Ministry of Housing and Urban-Rural Development’s requirements for “good housing,” launching the product value concept of “good living environment, good building quality, good layout design, good operation management, high intelligence level, and comprehensive value-added services,” forming a complete product standard system with six methods, 18 volumes, 108 guidelines, and 1,280 specific technical items, covering all residential product lines from rigid demand, improvement, to high-end.

Beyond new models and new products, CITIC Urban Development empowers all business cycles with new technologies and builds long-term competitive barriers through new ecosystems.

In terms of technology application, CITIC Urban Development covers the entire construction, product, and operation chain with digitalization, intelligence, and green technologies: on the construction side, applying digital twin, smart construction machinery, etc., to realize visualized, efficient, and safe construction; on the product side, integrating low-carbon shading, whole-house water purification, smart IoT systems to enhance living comfort and energy efficiency; on the operation side, using AI to assist market and customer analysis, expanding new parking lot tracks, and leveraging funds to obtain asset franchise rights, with refined operations to stabilize cash flow against cycles.

“Upholding professionalism as the bottom line, breaking through困局 with innovation, and creating the future through collaboration,” Yang Jin concluded his speech with a call.

Editor: Zhang Bei Chief Editor: Zhang Yuning