Financial lifeline: People walk past a propety development in Beijing. The government has called for local authorities to better support the funding needs of developers. — AP
SHANGHAI: China will reveal its first list of housing projects eligible for funding by the end of January, the latest attempt to boost bank lending for real estate to slow the sector’s slump.
The projects will be able to obtain financing “immediately” after the list is announced, the Housing and Urban-Rural Development Ministry said in a meeting last Friday, China Central Television reported.
Local officials must “quickly and attentively study and suggest eligible projects, coordinate the distribution of loans and support financing needs with precision”, the meeting concluded.
The meeting came as central bank data showed the growth rate of loans to property developers rose 1.5% year-on-year in the last quarter, the slowest pace in more than a year, as Chinese banks resisted official exhortations to lend more to the sector.
In a separate statement, China’s top financial regulator said the list of projects eligible for financing support should be screened “in accordance with the principles of fairness and justice” and assigned to particular financial institutions.
Projects with good credit conditions should be approved quickly, the National Financial Regulatory Administration added, while loans to projects with temporary credit difficulties should not be “blindly withdrawn” it said.
Many bankers are worried about lending to property developers because of default risk, as their careers are assessed partly on the basis of controlling bad loans. They have favoured lending to industrial companies instead, with loans surging since 2020.
The Housing Ministry will also give local governments more autonomy to tweak local property policies, the state broadcaster reported. Previously, local officials in some cities had to obtain approval from the central government for such changes.
The measures come just two weeks after the ministry first urged local governments to draft a list of projects eligible for funding and better support developers’ financing needs.
China’s prolonged property downturn has pummelled its economy, with developers struggling to repay debt and deliver projects. It’s sparked authorities to implement a raft of policy moves, including relaxing homebuying curbs in Beijing and Shanghai, two of the country’s biggest housing markets.
Regulators are also drafting a list of 50 developers eligible for a range of financing, Bloomberg News reported in November.
However, the impact of those earlier measures has been muted. China home prices in December fell the most in almost nine years and not a single city among 70 saw their existing-home prices rise from a month earlier. Economists have also called for further loosening in Beijing and Shanghai. — Bloomberg
