Skip to content

China to provide $29 billion in special loans to complete housing projects

China to provide $29 billion in special loans to complete housing projects

Thousands of middle-class Chinese have been stuck between a rock and a hard place after making down payments for properties that cash-strapped developers struggle to complete as they took more down payments to start new projects, thus creating a Ponzi-like scheme. 

Currently, news of China preparing to issue 200 billion yuan ($29 billion) of special loans to help struggling developers finish their projects has been reported by Caixin

China’s beleaguered property sector will get a much-needed boost from Beijing’s largest financial commitment to date in an effort to contain the property crisis that led to housing prices and real estate sales dropping in tandem. 

Furthermore, the China Development Bank and Agricultural Development Bank of China will be channeled through which these loans will pass through, with an explicit purpose to be used for homes that have already been sold but are not yet finished. 

Positive change 

In short, the dragged-out property downturn represented a significant strain on the growth of the Chinese economy, with the pace of GDP gains in Q2 2022 being the slowest since the Covid outbreak in Wuhan. 

Meanwhile, in a note to clients, Jizhou Dong and Stella Guo, analysts at Nomura Holdings Inc., expressed their positive sentiment toward the government’s special loans. 

“We view the central government’s introduction of bailout funding as the first meaningfully positive development in the past five to six weeks.”

Loosening restrictions

Only a few weeks ago, China unveiled a multi-pronged approach to help the real estate sector; however, the youth unemployment and liquidity crunch are weighing heavily on its growth prospect, with predictions that growth in 2022 will be below 5%. 

Furthermore, authorities tried various measures to spur the real estate sector by lowering down payments and supporting families with multiple children to buy more properties.  

Finally, China’s insistence on Covid zero policy and more lockdowns, coupled with global inflationary pressures, have banks weary of more loans. Despite the actions taken by the government, the present decline in the value of real estate, which is the first one in over 10 years, is expected to continue in the near future.

Buy stocks now with Interactive Brokers – the most advanced investment platform


Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account?

Services

IMPORTANT NOTICE

Finbold is a news and information website. This Site may contain sponsored content, advertisements, and third-party materials, for which Finbold expressly disclaims any liability.

RISK WARNING: Cryptocurrencies are high-risk investments and you should not expect to be protected if something goes wrong. Don’t invest unless you’re prepared to lose all the money you invest. (Click here to learn more about cryptocurrency risks.)

By accessing this Site, you acknowledge that you understand these risks and that Finbold bears no responsibility for any losses, damages, or consequences resulting from your use of the Site or reliance on its content. Click here to learn more.