© Reuters. A passenger rides a train travelling past residential buildings during the Spring Festival travel rush on Lunar New Year’s Eve, in Zhuozhou, Hebei province, China February 9, 2024. REUTERS/Florence Lo/file photo
HONG KONG (Reuters) – China’s housing authority said 123.6 billion yuan ($17.20 billion) of development loans have been approved and 29.4 billion yuan have been issued under a special mechanism aimed at injecting liquidity into the crisis-hit property sector.
Under China’s “whitelist” mechanism launched on Jan. 26, city governments recommend residential projects to banks suitable for financial support, and coordinate with financial institutions to meet project needs.
The mechanism is a key plank of Beijing’s efforts to stabilise the property sector’s debt crisis and boost confidence in an industry that accounts for a quarter of China’s GDP.
So far 214 cities across the nation have set up the mechanism, recommending more than 5,300 projects to banks, according to statement from the Ministry of Housing and Urban-Rural Development on Tuesday evening. Of this total, 29.4 billion yuan of loans involving 162 projects in 52 cities have been issued, it added.
Banks that decline any loans to the “whitelist” projects must provide a reason explaining their decision to the financial regulators, the ministry said.
The Mainland Properties Index rose 4% by midday on Wednesday, versus a 3% gain in the broader market.
China aims to ramp up financing for residential projects but banks’ reluctance to lend to the sector could be a major obstacle for distressed developers most in need of funds.
Developers and analysts have said any such loans can only be used for ensuring the completion of selected projects, and cannot be used to repay debt or help regain financial strength.
($1 = 7.1842 yuan)
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