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Chinese real estate companies that are “severely insolvent and have lost their operational capabilities” must go bankrupt and reorganize, the country’s housing minister said at a news conference.
“Those who commit acts that harm the interests of the masses will be will be resolutely investigated and punished in accordance with the law, and will be forced to pay the due price,” Ni Hong, Minister of Housing and Urban-Rural Development, said on the sidelines of the National People’s Congress on Saturday.
While stressing that the task of stabilizing the real estate market “remains challenging”, Ni detailed the progress made under the “white list” mechanism for financing real estate projects.
Over 6,000 projects were deemed eligible for financial support from commercial banks under the mechanism. “As of the end of February, commercial banks had approved loans exceeding 200 billion yuan ($27.85 billion),” Ni noted.
His statements come as China’s real estate sector continues to grapple with a liquidity crisis, with major property companies defaulting or delaying debt payments following Beijing’s crackdown on their highly leveraged debt.
Major property developers such as Evergrande (OTCPK:EGRNQ) and Country Garden (OTCPK:CTRYF) (OTCPK:CTRYY) have defaulted, while regulators are reportedly seeking financial support for China Vanke (OTCPK:CHVKF) (OTCPK: CHVKY) supported by the state. .
Home sales also slumped due to buyer concerns about developer financing and expectations that prices will fall in the future.