TLDR:

China’s financial regulator has announced measures to support the country’s struggling property market, including better support for cash-strapped developers and mortgage policies aimed at helping households. The National Administration of Financial Regulation plans to accelerate the implementation of the urban real estate financing coordination mechanism to provide financial support for real estate projects. Meanwhile, the People’s Bank of China has injected 1 trillion yuan of liquidity and created a new department to oversee credit support for weak links in the economy.

China’s Financial Regulator Pledges Steps to Shore Up Property Market

China’s financial regulator turned its attention to the property market, promising measures to support developers and households. The National Administration of Financial Regulation is prioritizing the implementation of the urban real estate financing coordination mechanism to provide financial support for real estate projects. The regulator will soon convene a meeting to request local governments to work with housing and construction departments to implement city-specific measures. The People’s Bank of China has also taken action, injecting 1 trillion yuan of liquidity and creating a new department to oversee credit support for weak links in the economy.

The property sector, which used to contribute around a quarter of China’s economic output, now only accounts for 5.8% of GDP in terms of added value. Concerns about social instability led to Chinese banks extending 350 billion yuan of loans to ensure completion of housing units. The non-performing loan ratio for banks stood at 1.62% in Q4 2023, indicating that the sector’s woes have not yet hit the banks.

The latest moves from the financial regulators come after a meeting of the State Council, which called for enhanced coordination of policy tools to support economic recovery. However, experts warn that China’s economic weakness has structural roots and that credit-fueled stimulus would only provide temporary relief while increasing financial risks.

Overall, authorities are aiming to stabilize the property market and support the economic recovery through various policy measures. However, skepticism remains about the effectiveness of these measures and concerns about broader challenges such as global market turmoil and geopolitical tensions.