Vice Premier He Lifeng urged on-time delivery of properties and financing support for developers at a meeting in central China, rallying efforts to revive a sector critical for this year’s economic growth target and financial stability. China’s property sector once contributed about a quarter of the national economic output, but it has yet to bottom-out in terms of investment and sales, while market confidence remains weak. “We must understand the property sector is critical,” the Vice Premier told local officials, developers and bankers in Zhengzhou, Henan province, during a two-day inspection tour. “There must be dedicated funding coordination mechanisms to expeditiously give loans to all the projects that meet the ‘whitelist’ requirements for timely completion and delivery.” China’s so-called whitelist was launched by the Ministry of Housing at the start of the year, with provincial governments asked to recommend to banks local residential projects that are deemed financially sound and fit for further loan support.
Vice Premier He also vowed to uphold the rights of homebuyers to stabilize expectations and the development of the sector, ordering stricter scrutiny of loans and presale accounts that are supervised by the government to prevent misappropriation, according to the official Xinhua News Agency. Zhengzhou is among the Chinese cities grappling with a large number of abandoned or stalled residential projects, with homebuyers seeking either a refund of their down payment or access to their new homes. While urging for more developers to be added to the government’s whitelist, He also requested targeted solutions for projects that have not yet qualified. “The central government has to ensure that, when other key sectors like exports are already recovering this year, the overall economic development trend should not be held back by prolonged property sector distress,” said Li Xuenan, Finance Professor at the Cheung Kong Graduate School of Business. The world’s second-largest economy is looking for consumption and technology to drive economic growth this year, but such a transition would take time, Li added. “More funding to ensure delivery of new homes also matters to social stability and helping people to spend more,” she said.
The top leadership is anxious to resuscitate the property sector after the pillar industry became one of the biggest drags on the economic recovery amid all-out efforts to attain this year’s growth target of “around 5%”. He’s trip came ahead of the release of a first-quarter GDP figure of 5.3%. Problems facing developers, though, remain, with investment having slumped by 9% year-on-year in combined figures for January and February, contrasting with the 4.2% increase in total fixed-asset investment (FAI). Total home sales also plunged by 29.3% year-on-year to a little over CNY1 trillion in the same period. In 2023, property investment fell by 9.6%, while sales dropped by 6.5%, despite cuts to mortgage and deposit rates. The slowdown also sliced 0.7 percentage points off China’s growth last year, according to the Bank of China (BOC), the South China Morning Post reports.
