Chinese Banks Greenlight $129 Billion Loans for Whitelisted Property Projects

Chinese banks have approved 935 billion yuan ($129 billion) in loans for real estate projects listed on official whitelists, reflecting significant fiscal intervention to arrest a dire property slump. This move follows recent directives by the National Financial Regulatory Administration (NFRA) and the housing ministry, which in January instructed local governments to create mechanisms to deliver targeted financial support to eligible property projects. The shortlisted projects are chosen based on developers' qualifications, credit records, and financial stability [para. 1][para. 2].

In the past months, home sales have declined sharply, putting additional strain on developers' financing options. However, lending to real estate developers by banks has shown a stable increase. Xiao Yuanqi, Vice Minister of the NFRA, highlighted this trend during a press briefing, indicating a concerted effort to stabilize financing for developers [para. 2][para. 3].

Sales of new homes saw a significant drop, declining by 31.1% in value year-on-year for the January-to-April period, exacerbating the 30.7% fall recorded in the first quarter, according to figures from the National Bureau of Statistics [para. 4]. By the end of March, outstanding yuan-denominated loans for real estate development had increased by 1.7% compared to the previous year, slightly higher by 0.2 percentage points than at the end of the previous year, based on data from the People's Bank of China [para. 5].

To facilitate these loans, the NFRA has advised major banks to form task forces to coordinate lending to projects on the whitelists and to promote stronger internal collaboration. Banks have been urged to adapt their loan evaluation and disbursement processes, granting more autonomy to local branches in loan approvals [para. 6][para. 7]. Additionally, banks were asked to establish detailed rules for due diligence exemptions for whitelisted projects. This includes provisions where local branches that dutifully approve loans but face defaults due to unavoidable circumstances will be exempt from liability [para. 8].

Xiao emphasized that banks should treat all property developers equally, independent of their ownership status. He also stated that loan disbursement should be aligned with the property development cycle to ensure the timely delivery of new homes [para. 9].

For further information, reporters Qing Na and editor Joshua Dummer can be contacted at their respective email addresses [para. 10].