China’s financial institutions have been urged to provide strong support to the country’s struggling real estate sector. This comes after the Chinese central bank made its largest cut in mandatory cash reserves for banks since 2021 and released a fresh policy mandate aimed at easing the cash crunch for Chinese developers who have been grappling with the crackdown on the sector’s high debt levels.
Xiao Yuanqi, deputy director of China’s National Financial Regulatory Administration, emphasized the importance of the financial industry in supporting the real estate sector, stating that it has a significant impact on the national economy and people’s lives. He called on financial institutions not to withdraw financing for projects facing difficulties blindly, but rather to provide greater support through various means such as extending existing loans, adjusting repayment arrangements, and adding new loans.
While the latest relaxation of funding guidelines is intended to be targeted and valid only through the end of the year, China’s state banks are set to issue operating property loans to real estate companies based on controllable risks and commercial sustainability. Eligible property developers may use these loans to repay existing loans and open market bonds they have issued.
The Ministry of Housing and Urban-Rural Development emphasized that local regions could adapt the newly released property policy guidelines as needed. Additionally, policy announcements have been accelerated with official efforts to speed up their implementation, including a rare decision to release news at a press briefing regarding Beijing’s stimulus announcement.
These developments come at a time when China’s stock markets are facing significant challenges, and such policy moves are typically only published online and disseminated via state media. The recent announcements and efforts signal the Chinese government’s intent to address the challenges faced by the real estate sector and the broader economy.
