China urges banks to extend loans to real estate companies after homeowners halt payments

In China homebuyers, furious at the delayed completion of properties they’re already paying for, have taken things into their own hands. Tens of thousands of them have begun withholding payments for unfinished projects across at least 50 cities in the country. In response, China’s banking regulator is urging banks to extend credit to real estate developers and support construction. The boycott has also fanned fears of financial contagion in China’s real estate sector, which accounts for up to 30 percent of the country’s GDP and is a key driver of growth.

To china now where home buyers furious at the delayed completion of their properties that they’re already paying for have taken things into their own hands tens of thousands of them have begun withholding payments for unfinished projects across at least 50 cities in the country in response response china’s banking regulator is urging banks to extend credit to real

Estate developers and support construction the boycott has also found fears of financial contagion in china’s real estate sector which accounts for up to 30 percent of the country’s gdp and is a key driver of growth but to discuss this further let’s cross to our correspondent in taipei so tsung han so good to have you on the program withholding mortgage payments

Is it’s a pretty big step what’s actually driven them to this point the root cause of the unfinished construction projects is a high degree of leverage um that is the private diversion of funds originally intended for the construction of buildings by housing developers with the impact of covid-19 pandemic on the chinese economy banks do not give loans to the

Developers funds do not flow to real estate anymore so these developers have a big problem with their cash flow they don’t have money to finish building these properties but many buyers have put their lifetime savings into these projects and have been suffering from the double pressure of mortgage and rent for a long time now they just want to stop their loss even

At expenses of the bank’s credit rather than to be totally wiped out beijing has taken quite a hard line with its real estate development developers but at the same time you know it’s not exactly open to popular activism like this so i’m interested to know what side the chinese government’s taking well uh the government just said that the key is to ensure that the

Delivery of buildings stressing that it would guide financial institutions to control risks and work with the people’s bank of china housing and construction departments and local governments to prevent the collapse of these projects however china’s financial institutions are also in the middle of the housing crisis itself and have been questioned for years for

Their inadequate supervision lending and even suspected of corruption in politics and the business as well as being affected by the high amount of bad debts playing the complex role of both co-conspirators and victims so it’s really hard to say which side that they are taking yeah and the pressure on the chinese real estate market is is you know is very well

Documented so where is this going to go from here the crisis in the real asset sector is spreading to the banking sector as i mentioned the total amount of non-performing loans due to refusal to repaid mortgage could reach 81 billion euros as the communist party approaches its 20s national congress in autumn and as chinese president xi jinping secure his third

Term in office the worsening debt problem in china’s real estate market could impact the country’s economic and political stability and in the process the international community and the financial markets will also feel the pain okay it’s so sung han in taipei for us thanks for the update

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China urges banks to extend loans to real estate companies after homeowners halt payments By DW News