Editor’s Note: CNN’s Meanwhile in China newsletter, which explores what you need to know about the country’s rise and how it impacts the world. Hong Kong CNN  —  Chinese stocks surged on Thursday after officials in a major city announced plans to buy unsold homes in what some analysts believe could be a trial run for a much bigger solution to the country’s property crisis. Hong Kong’s benchmark Hang Seng Index closed up 1.6%, hitting its highest level since August. The index has rallied nearly 30% from its January low, having entered a bull market earlier this month. Property developers, which were up 3.1% on average, led the way. Longfor Group, the ninth largest homebuilder in China, surged 11%, becoming the top performing stock on the Hang Seng Index. Sunshine 100 China Holdings, a Beijing-based developer, soared 127%, the best performer on the broader market. The rally comes after a district in the megacity of Hangzhou announced that the government would directly purchase unsold residential homes from the market and convert them into affordable housing. The announcement reinforced expectations that the Chinese government is considering a proposal to have local governments across the country buy millions of unsold homes, dubbed a “major solution” by Chinese media for the crisis-ridden property sector. Adding to the expectations, the National Development and Reform Commission, the country’s top economic planner, pledged on Thursday to “promote affordable housing” and explore “a new model” for the real estate sector. “We think this is a largely symbolic move to show support for the sector with a ‘national team’ for the housing market,” said Citi analysts. A pedestrian passes by the Hong Kong Stock Exchange electronic screen in Hong Kong, Friday, June 2, 2023. Asian stock markets followed Wall Street higher on Friday ahead of an update on the U.S. jobs market after Federal Reserve officials indicated they might skip another interest rate hike this month. (AP Photo/Louise Delmotte) Louise Delmotte/AP Related article Hong Kong stocks are back from the dead. Here’s why Speculation about just such a bailout has been rife since last month, when a Chinese media outlet reported that Beijing was learning from Japan’s experience of decades of stagnation and considering a plan to acquire unfinished housing units across the country. These units would then be turned into low-cost housing and would be sold or rented out. “[The proposal is] a much bigger support measure than the current pilot initiatives across the country, and one that is helping ease the negative spillover [for stocks] from fresh US tariffs on Chinese exports,” said analysts from ING Group. But fund managers are more cautious. “We are cautiously optimistic about the ‘government-led buying on unsold units’ as it’s still being rolled out in more cities, “ said Jeff Zhang, an equity analyst at Morningstar. “Funding issue could remain a key concern.” Beijing has struggled to contain the country’s prolonged property crisis, which has become a major drag on the economy and sparked nationwide protests by homebuyers. Many big cities have relaxed home-purchase restrictions over the past few weeks, including Hangzhou, Xi’an and Chengdu. At the end of last month, the Politburo, the top decision-making body of China’s Communist Party, vowed to explore new measures to tackle the housing crisis, including implementing “city-specific” policies to reduce housing inventory. Investors have been steadily pouring money back into Chinese shares since last month. The rebound follows a prolonged sell-off that sent key indexes in Hong Kong and Shanghai to their lowest levels in years, wiping trillions off the value of listed companies. Nasdaq Golden China Index, which tracks Chinese companies listed on Wall Street, has gained 11% since the start of April. It hit the highest level in more than seven months on Monday.