Chinese authorities have unveiled sweeping measures to rescue its struggling property sector, as regulators seek to offset years of harsh COVID-19 pandemic curbs and a real-estate crackdown that have stalled the world’s No. 2 economy.
China’s banking regulator and central bank on Friday issued a 16-point set of internal directives to promote the “stable and healthy development” of the industry, which were reported by Chinese state media yesterday.
The measures include credit support for debt-laden housing developers, financial support to ensure completion and handover of projects to homeowners, and assistance for deferred-payment loans for homebuyers.
Photo: Bloomberg
That came on the same day the Chinese National Health Commission issued 20 rules for “optimizing” Beijing’s “zero COVID” policy, where certain restrictions were relaxed to limit its social and economic impact.
“We view this as the most crucial pivot since Beijing significantly tightened financing of the property sector,” Nomura Holdings Inc chief China economist Ting Lu (陸挺) wrote in a note. “We believe these measures demonstrate that Beijing is willing to reverse most of its financial tightening measures.”
Hong Kong stocks surged more than 3 percent yesterday, extending Friday’s rally of more than 7 percent the measures were unveiled.
Beijing imposed widespread lending curbs on property developers in 2020, which exacerbated their liquidity issues and caused several of the largest to default on bond payments.
The knock-on effects on the massive real estate sector were severe, with cash-strapped developer Evergrande Group (恆大集團) — China’s largest — and others failing to complete projects, sparking mortgage boycotts and protests from homebuyers.
The measures emphasized “guaranteeing the handover of buildings,” and ordered development banks to provide “special loans” for the purpose, according to a document circulating online.
It orders financial institutions to treat state-owned and private real-estate enterprises equally, as well as “actively cooperating with distressed real estate enterprises in risk management.”
The measures also include “extending the transition period arrangements... of real-estate loans” for distressed developers, and support for “high-quality real-estate enterprises to issue bond financing.”
“The plan includes financial stability measures that aim to prevent massive defaults and hence provide a ‘soft landing,’” Australia and New Zealand Banking Group Ltd analysts wrote in a note.
However, they also said these changes — alongside limited loosening of “zero COVID” measures — would not cause an immediate recovery for the ailing sector.
“While not many are expecting a financial crisis caused by the current property downturn, the mainstream view is that the property sector would stay weaker for longer. Therefore, the worst is far from over for developers,” Macquarie Securities Inc economist Larry Hu (胡偉俊) wrote in a note.
Prices of new homes have been falling for more than a year, while demand is struggling to pick up owing to ongoing strict pandemic controls that have dampened consumer confidence.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Taiwan is open to joining a global liquefied natural gas (LNG) program if one is created, but on the condition that countries provide delivery even in a scenario where there is a conflict with China, an energy department official said yesterday. While Taiwan’s priority is to have enough LNG at home, the nation is open to exploring potential strategic reserves in other countries such as Japan or South Korea, Energy Administration Deputy Director-General Chen Chung-hsien (陳崇憲) said. While the LNG market does not have a global reserve for emergencies like that of oil, the concept has been raised a few times —
AI-FUELED DEMAND: The company has been benefiting from the skyrocketing prices for DRAM chips amid the AI frenzy, especially its core product — DDR4 DRAM chips DRAM chipmaker Nanya Technology Corp (南亞科技) yesterday reported that its revenue for the first quarter surged 582.91 percent to NT$49.09 billion (US$1.54 billion) from NT$7.19 billion a year earlier, as the supply crunch caused chip price spikes. Last quarter’s figure is the highest on record. On a quarterly basis, revenue jumped 63.14 percent from NT$30.09 billion, the company said. In January, Nanya Technology expected global DRAM supply scarcity to continue through the first half of 2028, thanks to strong demand for artificial intelligence (AI) applications. Market researcher TrendForce Corp (集邦科技) forecast prices of standard DRAM chips would rise between 58 percent and 63
HIGHER PRICES: Given rising energy costs, CPC raised natural gas prices for generators by 41.58%, which Taipower said would raise its power generation costs by NT$10 billion State-run CPC Corp, Taiwan (CPC, 台灣中油) has activated its fourth naphtha cracker to boost ethylene supply, aiming to ease concerns over plastic material shortages amid tensions in the Middle East, the Ministry of Economic Affairs said yesterday. The move is expected to add 19,000 tonnes of supply this month and 30,000 tonnes next month, Deputy Minister of Economic Affairs Ho Chin-tsang (何晉滄) said at a meeting of the legislature’s Economics Committee in Taipei. CPC on Tuesday held talks with major polyethylene producers, including Formosa Plastics Corp (台塑), Asia Polymer Corp (亞聚) and USI Corp (台聚), and pledged to supply ethylene feedstock
RSS