China rolls out fresh property relief measures to stem the fallout from Evergrande's meltdown
- Officials in China are boosting property sector relief measures to blunt the impact of Evergrande's collapse.
- The property giant was ordered by a Hong Kong court to liquidate this week.
Policymakers in China have rolled out new measures to guard the property sector against the fallout from the collapse of property developer Evergrande, which a Hong Kong court ordered to liquidate this week.
Beijing announced its latest real estate "cure kit", which includes a new loan worth 330 million yuan ($46 million) to a state-backed development as part of the government's newly introduced "project whitelist" mechanism, China's state media reported on Wednesday.
The "project whitelist," initiated by China's Ministry of Housing and Urban-Rural Development, is meant to support a list of real estate companies eligible for credit, debt, and equity financing.
Thanks to the mechanism, officials in Nanning, a city in Guangxi, extended the project whitelist to 107 developments, including a state-backed project securing a loan from China Mingsheng Banking Corp. Chongqing, in the southwest, has its own whitelist with 314 projects requiring 83 billion yuan in financing, China Securities Journal reported.
In a separate effort, China is lifting home-buying curbs for houses in two of its major cities, Suzhou and Shanghai, followed soon by Guangzhou. Previously, residents in Suzhou were only allowed to buy up to three apartments with less than 120 square meters (1,291 square feet), and single non-Shanghai homeowners weren't allowed to buy homes in certain areas, per Reuters.
The new measures are part of a wider series of economy-boosting initiatives, especially in the real estate sector, which constitutes one-quarter of the country's economy. The crisis in the property sector stems from huge debt and overbuilding in the last decade, which has resulted in a liquidity crisis for many property developers, including Evergrande. The firm is the world's most indebted real estate developer, with $300 billion in liabilities.
The company's troubles sent country's property sector into a tailspin starting in 2022 when it defaulted on some of its offshore bonds. On Monday, a Hong Kong court ordered Evergrande's liquidation after two years of attempted restructurings.
China is moving mountains to hold the real estate sector's crisis from pouring into other sectors. The government introduced its largest "economic first aid package" in two years, including a $140 billion liquidity injection into the banking system via a reduction in reserve requirements.
Bloomberg also reported last week that officials are mulling a massive stock-market rescue package, as well as propping up stocks by banning big investors from lending certain shares for the purposes of short selling.