Chinese Banks Commit to Providing over 5.4T Yuan in Credit to Leading Real Estate Enterprises at Prompting of Regulators

27

Chinese banks have dramatically stepped up financial support for leading real estate enterprises, following the launch of new measures by regulators towards the end of the year to keep the China’s property market afloat.

During the period from the start of November to 9 January, at least 105 Chinese banks have committed to providing over 5.46 trillion yuan in credit to 188 real estate enterprises, according to figures from the China Index Academy.

The sharp increase arrives after China launched the “16 Financial Measures” (金融十六条) and “Three Arrows” (三支箭) policy in November, to drive greater financial support for the recently beleaguered property sector.

The Central Economic Work Conference that was held towards the end of 2022 called for “satisfying rational financial demand of the [property] sector; driving industry reorganisation and takeovers, effectively preventing and dissolving the risk of high-quality leading real estate enterprises, and improving their balance sheets.”

In December Guo Shuqing (郭树清), party secretary of the Chinese central bank and chair of the China Banking and Insurance Regulatory Commission (CBIRC) convened a party meeting that called for “satisfying the rational financing demand of the real estate market, and improving the balance sheets of high-quality real estate enterprises.”

“Multiple reference to ‘improving the balance sheets of high-quality leading real estate enterprises’ embodies the determination [of regulators] to stabilise real estate,” said Ming Ming (明明), chief economist with CITIC Securities, to Securities Daily.

“The fact that beneficiaries of these policies are ‘high-quality leading real estate enterprises’ means that the policies are selective, protecting enterprises with stable operations while leaving out enterprises that have engaged in disorderly expansion, which expedites the formation of a healthy real estate market.”