China Stated-Owned Banks Ordered To Loosen Restrictions For Loans To Save The Real Estate Market

On December 8th, according to media reports, the Bank of Communications of China issued a statement that it had signed an agreement to support eight real estate companies in response to the CCP’s call to alleviate the severe liquidity shortage in the real estate industry.

In China, supply cuts spread after many developers defaulted on their debts and were forced to stop work. The Chinese government has called on banks for emergency blood transfusions to tidy up the real estate sector, which accounts for about a quarter of the economy. It is said that the Bank of Communications will increase its cooperation with real estate com-panies including Longfor, Gemdale, and Greentown in real estate development loans, M&A transaction loans, and bond investments.

Last month, six of China’s largest commercial banks, including the Bank of Communications, approved at least $162 billion in loans to property developers. Faced with loosened re-strictions on financing channels, real estate developers have raised funds by issuing bonds and selling equity. According to a bond prospectus posted on China’s main bond-issuing website on Thursday, Seazen Holdings plans to raise around $287 million through medium-term notes. The proceeds will be used to build real estate projects, repay the developer’s dollar bonds, and replenish its working capital.

Analysts commented under the CCP’s domestic Zero-Covid policy, China’s domestic economy is weak, coupled with the intensified sanctions posed by the international community. China’s various industries will face more and more challenges, like the collapse of the real estate finance industry.