ALBAWABA – China’s government is putting pressure on banks to plug the estimated $446 billion shortfall in funding that is needed to end the Chinese property crisis, Bloomberg reported Thursday.
Policymakers are finalizing the whitelist of 50 developers eligible to receive financial support in the sector, including Country Garden Holdings Co. and Sin-Ocean Group, Bloomberg confirmed.
The country’s top lawmaking body said banks should increase funding for developers to reduce the risk of additional defaults and prevent the escalation of the ongoing Chinese property crisis and make certain that housing projects get completed.
Gov’t push to end Chinese property crisis - Shutterstock
China’s $56 trillion banking industry has already been battling with shrinking margins and souring loans.
Authorities have steadily increased pressure on lenders to support the economy and end the ongoing property crisis, according to Bloomberg.
Net interest margins at the big state-owned banks dropped to a record 1.74 percent at the end of the first half of 2023, below the industry’s 1.8 percent threshold. This threshold is seen as necessary to maintain a reasonable amount of profitability for banks in China.
A Bloomberg index of Hong Kong-listed Chinese banks has tumbled as much as 18 percent this year from a high in May, while the big four state banks remain near record low valuations at about 0.4 of their book value.
Chinese officials are due to hold the annual Central Economic Work Conference in December to flesh out policy objectives for the coming year.
