China’s real estate sector has employed many construction workers, who usually live in temporary accommodation nearby.
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BEIJING – China’s troubled real estate developers will not receive a big bailout, Chinese authorities have hinted, warning that those who “harm the interests of the masses” will be punished.
“Real estate companies that are seriously insolvent and have lost their ability to operate should be bankrupt or restructured in accordance with the law and market principles,” Housing and Urban-Rural Development Minister Ni Hong said at a press conference on Saturday.
“Those who commit acts detrimental to the interests of the masses will be vigorously investigated and punished in accordance with the law,” he said. “You will have to pay the price due.”
That’s according to a CNBC translation of his Mandarin-language remarks, which was published in an official transcript of the news conference held as part of China’s annual parliamentary sessions.
Ni’s comments come at a time when major property developers from Evergrande to Country Garden have defaulted on their debts, while declining sales of new homes cast future deals into question.
In 2020, Beijing cracked down on developers’ heavy reliance on debt for growth to curb speculation in the property market. But many developers soon ran out of money to complete construction of apartments, which are typically sold to homebuyers in China before completion. Some buyers stopped paying their mortgages as part of a boycott.
The authorities have now announced measures to enable some developers to obtain financing. But the national stance on reducing the role of real estate in the economy has not changed.
This year’s annual government meeting highlighted the country’s focus on investing in and building high-quality manufacturing capabilities. In contrast, leadership hasn’t mentioned the huge real estate sector as much.
Real estate was barely mentioned during a press conference last week focused on the economy, while Ni spoke during a meeting focused on “people’s livelihoods.”
Ni said authorities would encourage housing sales and the development of affordable housing, but stressed the need to take longer-term considerations.
Short-term changes in the real estate sector have a significant impact on China’s overall economy.
Real estate once accounted for about 25% of China’s GDP, including related sectors such as construction. UBS analysts estimated late last year that real estate now accounts for about 22% of the economy.
Last week, Prime Minister Li Qiang said in his government work report that China will “move faster to promote a new real estate development model” in the coming year.
“We will expand the construction and supply of state-subsidized housing and improve the basic systems for standard housing to meet people’s basic needs for housing and their diverse demands for better housing,” the English-language version of the report said.
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2024-03-11 04:07:04
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