Chinese authorities have sent a clear message that struggling real estate developers shouldn’t expect a significant bailout, as the government puts on a spotlight on accountability and market principles in the face of financial woes, as per a CNBC report.
Ni Hong, Minister of Housing and Urban-Rural Development, stated during a press conference that insolvent companies must face the consequences of bankruptcy or restructuring, warning that those who harm the interests of the masses will be punished.
These remarks were made during China’s annual parliamentary meetings, reflecting the government’s stance amid defaults by major developers like Evergrande and Country Garden.
Ni Hong’s comments underscore the government’s resolve to address the challenges within the real estate sector, which has been grappling with defaults and plunging new home sales.
Beijing’s crackdown on developers’ heavy reliance on debt for growth since 2020 aimed to curb speculation in the property market.
However, this crackdown left many developers unable to complete construction projects due to financial constraints, exacerbating the sector’s troubles.
Authorities have taken steps to provide financing to some developers but remain committed to reducing the role of real estate in the economy.
The annual government gathering this year has highlighted China’s focus on investing in high-end manufacturing capabilities, with less emphasis on the real estate sector compared to previous years.
While discussing “people’s livelihoods,” Ni Hong emphasised the promotion of housing sales and affordable housing development while stressing the importance of long-term considerations.
Real estate’s significant impact on China’s overall economy cannot be understated, with the sector once accounting for about 25 per cent of GDP, including related sectors such as construction.
Premier Li Qiang’s government work report for the upcoming year stressed on the need to foster a new development model for real estate, focusing on scaling up the supply of government-subsidised housing and improving basic systems for commodity housing to meet diverse housing demands.
The government’s commitment to guaranteeing housing access while advancing towards a more sustainable economic model is reflected in these initiatives.
The English-language version of the report highlighted the government’s efforts to meet people’s essential housing needs.
Source: www.wionews.com
