An artwork combining Chinese yuan banknotes with the Chinese flag
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Chinese financial institutions should provide strong support to the country's beleaguered real estate sector and not “blindly withdraw” financing for projects in difficulty, a senior Chinese financial regulatory official said.
His strongly worded comments come on the heels of the Chinese central bank's biggest reduction in banks' mandatory cash reserves since 2021. Beijing also recently issued A new political mandate It aims to ease the cash crunch for Chinese developers, who are struggling under the crackdown on the sector's ballooning debts.
“The financial industry has an irrevocable responsibility and must provide strong support,” said Xiao Yuanqi, deputy director of China's National Financial Regulatory Administration. Press Conference in Beijing on Thursday, according to a CNBC translation.
He added: “We all know that the real estate industry chain is long and includes a wide range of fields, has an important impact on the national economy and is closely linked to people's lives.”
China's real estate problems are closely intertwined with the finances of local governments because they typically rely on land sales to developers for a large portion of revenue.
The real estate market fell after Beijing cracked down on developers' heavy reliance on debt for growth in 2020, hitting consumer and broader growth in the world's second-largest economy.
“For projects facing difficulties but whose funds can be stabilized, we should not blindly withdraw loans, suppress loans, or cut loans,” Xiao said. He added: “We must provide greater support by extending existing loans, modifying repayment arrangements, and adding new loans.”
However, Xiao warned that the recent easing of financing guidelines, which is only in effect until the end of the year, is designed to be targeted.
“Chinese state banks will issue operational real estate loans to real estate companies on the basis of controllable risks and business sustainability,” Xiao said.
“Eligible real estate developers can then use these loans to repay existing loans to real estate companies and open market bonds they have issued,” he said.
China's Ministry of Housing and Urban-Rural Development held a meeting on Friday morning that reiterated that local areas can adapt the newly issued property policy guidelines as needed. According to official reports.
Although this meeting is not new, it is among several this week – signaling official efforts to speed up implementation of recent policy announcements.
Beijing's stimulus announcement on Wednesday also represents a rare decision to break the news early Press ConferenceWhich suggests that the Chinese government is signaling its intent at a time when the country's stock markets are teetering on the brink of capitulation.
Such political movements are usually only published online and disseminated through state media. But the Governor of the People's Bank of China, Pan Gongsheng, announced the reduction of the expected reserve ratio and real estate policy requirements personally.
Last week, Chinese Premier Li Qiang announced the country's annual GDP growth figure in his speech to the World Economic Forum in Davos – one day before China's National Bureau of Statistics was scheduled to release the country's official GDP edition and other data.
— CNBC's Evelyn Cheng contributed to this story.
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