China urges banks to maintain stable property financing

CHINA’S financial regulators have asked banks to stabilise lending to property developers and construction firms, the latest effort by policymakers to turn around the real-estate crisis and bolster economic growth.

The authorities support the “reasonable” extension of existing real estate development loans and trust loans, said a statement posted on the website of the People’s Bank of China (PBOC) after a Monday (Nov 21) meeting with commercial banks. The gathering was jointly organised by the central bank and the banking regulator. 

The regulators reiterated that the “reasonable” demand of home buyers for mortgages will be met. A key financing support programme must be “used well” to help private property developer sell bonds, while legal protection and regulatory policy support for special loans aimed at ensuring housing project delivery will be improved to promote the stable and healthy development of the market, the statement said.

The call is the latest in a slew of actions taken by the government to try to stop the more-than-year-long slump in the property market that’s dragging down China’s economic growth and undermining local government income. The details in Monday’s meeting are similar to a 16-point package authorities rolled out earlier this month to help the embattled sector, with measures ranging from addressing a liquidity squeeze at developers to loosening down-payment requirements for homebuyers. 

At the meeting on Monday, the PBOC and the China Banking and Insurance Regulatory Commission urged banks to expand medium- and long-term lending to help policy bank financing drive effective investment. Credit demand from manufacturers and service providers should be supported via the special relending loan programme for equipment upgrading, the regulators added.

PBOC deputy governor Pan Gongsheng and CBIRC vice-chairman Xiao Yuanqi made comments at the meeting, which was attended by heads of institutions including the Big Four state-owned banks, the Postal Savings Bank, and the branches of the central bank and the banking regulator, said the statement.

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A Bloomberg gauge of Chinese developers’ stocks pared losses after the publication of the statement. It traded 2 per cent lower in the mid-afternoon after sinking as much as 4 per cent in the morning session. The Shanghai Stock Exchange Property Index closed 0.5 per cent lower after earlier being down 2.7 per cent. BLOOMBERG