Chinese Gov’t to Issue US$29bn Loan to Help Developers Complete Housing Projects

• 5 September 2022
• International News
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The Chinese government plans to issue 200 billion yuan (US$29 billion) in special loans to help developers finish their stalled housing projects, according to Caixin.

This loan will be issued under the cooperation of the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the central bank.

The loan may be provided by China Development Bank, Agricultural Development Bank of China, and the Export-Import Bank of China, according to the plan.

The fund is given to stimulate the real estate market or rescue developers. The funds will be strictly limited to the construction and delivery of residential projects that have been sold or suspended due to developers’ liquidity difficulties.

Local governments will comb through local housing projects and review developers’ assets and liabilities before lending the funds.

Applications for the loans will be due at the end of March 2023.

The scheme comes after many homebuyers stopped making payments on more than 100 presold projects in more than 50 cities as of July in protests over delayed delivery of houses by overindebted developers.

Under the Three Red Lines policy, many Chinese over-indebted developers such as Evergrande, Shimao, and Sunac have missed debt repayment deadlines.

Some foreign analysts claimed that the underlying causes of this crisis are the incontrollable overheated market which led to over-indebtedness, overreliance on construction as a failsafe to economic downturns and contribution of GDP, and ineffectiveness of policy changes that do not solve the root cause of the issue. (Read more)

• Economy and Finance
• Investment and Funding