These and other measures announced Friday marked Beijing's latest efforts to address issues in the massive real estate sector.
The People's Bank of China will provide 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises (SOEs) so they can buy unsold apartments that have already been built.
Also Friday, the PBOC removed a floor on mortgage interest rates, and lowered the minimum down payment ratio for first- and second-time home buyers.
BEIJING — Chinese authorities on Friday pledged new support for state-owned enterprises to enable them to buy unsold apartments, in an effort that could help developers get more funding to finish construction on pre-sold properties.
These and other measures announced Friday marked Beijing's latest efforts to address issues in the massive real estate sector.
"I think it is encouraging that the policy is taking a turn of direction trying to support the housing market," said Zhu Ning, a professor of finance at Tsinghua University and author of the book "China's Guaranteed Bubble."
People's Bank of China Deputy Governor Tao Ling told reporters at a briefing Friday the central bank would provide 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises (SOEs) so they can buy unsold apartments that have already been built.
The central bank expects the support to release 500 billion yuan in financing for such purchases, which the SOEs could turn into affordable housing.
The real estate companies can then use funds earned from those sales to complete construction on other apartments, the central bank said.
As for unfinished, pre-sold properties, the National Financial Regulatory Administration Deputy Director Xiao Yuanqi told reporters that commercial banks have provided 935 billion yuan in loans to finish construction on whitelisted projects since the program was released in January.
"The government's purchase of housing inventory can inject more liquidity to developers, who could then have more resources for housing delivery," Larry Hu, chief economist at Macquarie, told CNBC. "Finally the government stepped in as the buyer of the last resort."
"At this stage, it's mainly SOEs and local governments to implement the policies, but their resources may be too limited to move the needle at the macro level," he said. "Later on, we might see more efforts from the central government."
Developers "that must go bankrupt should go bankrupt, while those that need to be restructured should be restructured," Dong Jianguo, deputy head of the ministry of Housing and Urban-Rural Development, told reporters in Mandarin, translated by CNBC. He said homebuyers' interests and rights should be prioritized, and those that violate the law should be punished.
To be clear, PBOC is lending money to SOEs (the central government financial institution is lending money to local government entities). The SOEs are then purchasing assets from the real estate companies.
The government is lending money to itself (loan). The government is then giving that money to the property owners (bailout).
It is not "giving" that money to the property owners. It is exchanging that money for property. It is not free money.
You do realize that you've moved the goal posts, right? Have you accepted that this action is a bailout?
The assets being purchased are overvalued (which is why they haven't been sold already), though presumably the SOEs will purchase in bulk and negotiate a lower price-per-unit than an individual homebuyer would. This is speculative because the SOE purchases are still in the future. The amount that a real estate company gets from their particular SOE probably depends on how much of a bribe the real estate owner is able to give to the relevant government official(s), and the most likely outcome is that the real estate owner transfers some of the purchase money back to the government official (kickbacks).
Yes the government will acquire assets in exchange for the money, but (a) this is not a loan, it is a government purchase of assets from companies that could not sell those assets normally, which is a bailout; and (b) the real value of the assets is highly debatable - if they could not be sold, then they are technically worth nothing.
The whole controlled deflation of the real estate sector and the crackdown on speculation that has soured so many upper class chinese wouldnt have been happening if corruption was still endemic at the level you are describing. Thats a view of China from 15 years ago, not now. Still a lot of corruption but not nearly enough to play a systemic role in industry and sector wide policies and trends like what you are descibing. This shows a wrapped view of current goals and competence of the Chinese state machinery that makes your other speculation about the rates they are gonna pay, how valuable these are gonna be in state hands or the financial freedom and speculative space these private companies may have going forward (tregarding the use and obligations from the money from said sales) more guesswork on shakey grounds