PBOC Official Hails Gradual Correction of “Overreaction” of Financial Markets to Real Estate Sector Risk in Wake of Evergrande Debt Crisis

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A senior official from the Chinese central bank says he expects a gradual correction of the “excessive” response of financial markets to risk in the domestic real estate sector following the debt woes of property giant Evergrande Group.

“Recently, China’s real estate market and related financial markets have seen some volatility…this is a stress response by some market actors to the default incidents of isolated enterprises,” said Pan Gongsheng (潘功胜), People’s Bank of China (PBOC) deputy governor and head of the State Administration of Foreign Exchange (SAFE), on 20 October during a key note speech delivered at the 2021 Financial Street Annual Forum (2021金融街论坛年会).

“With the guidance of expectations by financial regulatory authorities, the excessive contraction in the risk preferences of financial institutions and financial markets is gradually being corrected, and financing behaviour and financial market pricing is gradually returning to normal.

“The next step will be for financial authorities to gradually cooperate with the housing authorities and local governments to firmly uphold the healthy development of real estate markets, and maintain the lawful rights and interests of housing consumers.”

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