Chinese Developers Receive Project Loan Backing Amid Government Support

Rapid Expansion of Whitelists for Distressed Property Developers in China

In China, more distressed property developers are benefiting from the rapid expansion of the government policy aimed at injecting liquidity into the crisis-hit sector. Sunac China, Greenland, CIFI, and SCE Group announced that local governments had added some of their projects to whitelists, making them eligible for bank loans.

Government Policy for Increasing Liquidity in the Property Sector

Launched on Jan. 26, the “project whitelist” mechanism involves 35 cities recommending residential projects in need of financial support to banks and coordinating with financial institutions to meet these projects’ needs.

Country Garden’s Announcement and Support from Local Authorities

Country Garden, China’s largest private property developer, revealed that over 30 of its projects had been added to whitelists. Sunac also reported that over 90 of its projects had been included in the first batch of whitelists, offering significant relief in terms of financing and cashflow pressure for their operations.

Whitelisted Projects and Localities

Other developers like Greenland, which had 34 projects on the list, and CIFI with 18 projects listed, shared their achievements regarding whitelists in various cities and provinces in the country.

Financial Impact and Market Reaction

The share prices of the developers fluctuated, with some closing flat and others experiencing both gains and losses. The market reaction is indicative of the impact of the government policy and local authorities’ support on the property sector.

Challenges Faced by the Property Sector and the Need for Financing

Despite these positive developments, the challenges faced by the property sector and the urgent need for financing remain significant. Banks’ reluctance to lend to distressed developers is a major obstacle that needs to be addressed.

Expectations for Future Whitelists and Use of Loans

Developers and investors anticipate further whitelists and expect loans to be utilized solely for ensuring the completion of selected projects, without being diverted to debt repayment or financial recovery efforts. This distinction is crucial for the effective utilization of the loans.

($1 = 7.1962 renminbi)