After a year 2022 black for the sector, which provides a quarter of the national gross domestic product, the authorities seek to revive it.
by Simon Leplâtre (Shanghai, Correspondence)
During the last quarter, it was a property developer who posted the best performance on the Hong Kong Stock Exchange: since October 31, 2022, Country Garden Holdings has won 190 %. The sector, however, is going through an unprecedented crisis, real estate transactions having dropped by 30.8 % in December compared to 2021, according to China Real Estate Information Corp, which examines sales of the main Chinese promoters. This is the sixteenth month of decline. The enthusiasm of investors is the hope that the worst has passed and that the government will change its approach, going from a strict regulatory campaign in the sector to a support phase. However, the experts launch a warning against any excess of confidence.
In mid-December, the Deputy Prime Minister, Liu He, in charge of the economy, had put balm at the heart of the promoters, claiming that real estate constituted a “pillar” of the national economy. The sector, in fact, ensures a quarter of the gross domestic product. On January 6, the Minister of Housing, Nor Hong, said, declaring that “China [would] work to promote the recovery and stable development of the real estate market [in 2023]”.
This turning point was started in mid-November, when the Banque Populaire de China (the Central Bank) published a sixteen points plan in which it called to facilitate the financing of healthy promoters. The said plan was followed by the promises made by large Chinese banks to unlock 3,190 billion yuan credit (435 billion euros) for the sector.
restore confidence in households
There was an emergency. For the past year and a half, Chinese real estate has been shaken by cascade payment defects, following a deleveraging campaign which limits the possibilities of financing for too indebted promoters. According to the Bloomberg news agency, the promoters missed at least 140 debt deadlines in 2022 – which, in total, represents $ 50 billion (46 billion euros) of unpaid – both on internal and international markets. The most emblematic case is that of Evergrande, giant in debt up to 270 billion dollars at the end of 2021. Today, local authorities make sure to ensure the completion of abandoned Evergrande projects, because the buildings Unpleasant have become the obsession of potential customers.
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