China’s banking regulator has sought to assuage concerns about the potential impact of property giant Evergrande Group’s ongoing debt woes on the real estate market and financial sector.
“Evergrande Group’s problems are the problems of an individual enterprise, and will not have a major impact upon the credibility of the sector or Chinese-invested enterprises as a whole,” said Liu Zhongrui (刘忠瑞), a senior official from the statistics and risk assessment department of the China Banking and Insurance Regulatory Commission (CBRIC), at a press conference held on 21 October.
“The credibility of Chinese-invested enterprises fundamentally lies in the steady improvement of the Chinese macro-economy,” he said.
“This sets the foundations for the credit of Chinese-invested enterprises, as well as sets the foundations for the long-term stable development of real estate enterprises.
“For this reason, the problems of an individual enterprises will not have a major impact upon the sector as a whole or Chinese-invested enterprises as a whole.”
With regard to the risk implications of the Evergrande crisis for the banking sector, Liu said financial debts accounted for less than one third of Evergrande’s total liabilities, and its overall risk exposure isn’t that large.
“Evergrande’s debts are also quite spread out amongst various banks, and for individual banks the overall risk exposure isn’t large, and risk is controllable overall,” said Liu.
CBIRC data indicates that as of the end of September real estate loan growth had fallen to 8.6%, nearly three percentage points lower than the growth rate for overall lending.
Liu said that in future CBIRC would “continue to uphold the position that houses are for occupation, not speculation; firmly refrain from using real estate for short-term economic stimulus, continue to effectively implement long-term effective real estate mechanisms, guide banks and insurance institutions in accurately grasping and effectively implementing the real estate financial macro-prudential regulatory system, maintain the continuity and stability of real estate financial regulatory policies, and expedite the steady, healthy development of the real estate market.”