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China Has $501 Billion to Bail Out Its Property Mess

S&P Global estimates that the funding gap for stalled projects in China could reach as much as 2 trillion yuan. This is far more than the 700 billion to 800 billion yuan that was previously estimated.

September 23, 2022
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According to CLSA Ltd., China has enough ammunition to salvage its beleaguered property sector, as total bailout funds could reach 3.57 trillion yuan ($501 billion) with central government support.

S&P Global estimates that the funding gap for stalled projects in China could reach as much as 2 trillion yuan. This is far more than the 700 billion to 800 billion yuan that was previously estimated.

In an effort to address the worsening property crisis, authorities have implemented a number of measures, including reducing interest rates, asking banks to meet the reasonable financing needs of developers, and offering special loans of 200 billion yuan through policy banks to ensure that property projects are completed.

According to S&P, there are approximately 2 million homes that were presold by developers but have not been completed. Despite various measures taken by local governments, the number of people boycotting mortgage payments has increased since August. Homeowners are also becoming more assertive in their demands, citing a range of concerns such as poor construction and noise pollution as justification for stopping payments.

S&P analysts led by Edward Chan have said that fixing the property downturn is important to the economy and social stability, two major objectives of the government. They added that the downturn has now reached a point where the government may feel the need to establish a definitive turning point.

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