China’s Banking Regulator Calls for Expanding Support for Domestic Demand, “Normal Circulation” Between Real Estate and Finance

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The China Banking and Insurance Regulatory Commission (CBIRC) has called for Chinese financial institutions to play a greater role in supporting both domestic demand and the recovery of the recently beleaguered real estate sector.

On 27 December CBIRC said it recently convened a meeting of its party committee that called for “strengthening the intensity of financial support for the expansion of domestic demand.”

“Financial policy must more actively cooperate with fiscal policy and social policy, and put support for the recovery and expansion of consumption in priority position,” the meeting said.

The meeting highlighted efforts to “encourage the consumption of major consumer items including clean energy cars and green household appliances,” as well as “strengthen support for financially constrained micro and small-enterprises and individual industrial and commercial proprietors.”

With regard to the real estate sector, the CBIRC meeting called for “expediting normal circulation between finance and real state, effectively performing work to ensure the delivery of properties and protect livelihoods and stability; satisfying the rational financing demands of the real estate market, and improving the balance sheets of high-quality real estate enterprises.”

“[We] uphold the position that houses are for occupation not speculation; the implementation of differentiated housing loan policy on a city-by-city basis, and satisfying inelastic and improvement housing demand.”

CBIRC also flagged support for the development of the long-term rental housing market, and driving the steady transition of real estate towards a new model of development.

With regard to financial risk, CBIRC said that it would accelerate reform and risk disposal at small and medium-sized banks and insurance institutions; encourage banks to expand their disposal of non-performing assets, and drive the implementation of trials for smaller banks to accelerate the disposal of non-performing loans.

CBIRC will also cooperate in efforts to dispose of the hidden debt risk of China’s local governments.