China's real estate industry employs many construction workers, who usually live in nearby temporary housing.
Bloomberg | Bloomberg | Getty Images
BEIJING – Chinese authorities have indicated that struggling Chinese real estate developers will not receive a large-scale bailout and warned that those who “undermine the interests of the public” will be punished.
“Regarding real estate companies that are seriously insolvent and have lost their ability to operate, those companies that should go bankrupt in accordance with the law and market principles should go bankrupt or be restructured,'' said Minister of Housing and Urban-Rural Affairs Japan. . Mr. Kaihatsu said at a press conference on Saturday.
“Those who commit acts that harm the interests of the public will be firmly investigated and punished according to the law,” he said. “They will be made to pay the price they deserve.”
This is according to a CNBC translation of his remarks in Mandarin, which were included in the official transcript of a press conference held on the sidelines of China's annual parliament.
Nee's comments come as major real estate developers from Evergrande to Country Garden have defaulted on their debts and the future of their businesses is in doubt due to a drop in new home sales.
In 2020, the Chinese government cracked down on developers' heavy reliance on debt for growth in an effort to crack down on speculation in the real estate market. However, many developers quickly run out of funds to complete construction of the apartments, which are typically sold to Chinese home buyers before completion. Some buyers stopped paying their mortgages in boycotts.
Authorities have since announced measures to provide funding to some developers. However, the country's stance on reducing the role of real estate in the economy remains unchanged.
This year's annual government meeting highlighted the country's focus on investing in and building high-end manufacturing capacity. In contrast, the leadership has said little about the huge real estate sector.
At last week's press conference, which focused on the economy, there was little talk of real estate, but Mr. Ni spoke at a conference that focused on “people's livelihoods.”
Mr Nee said authorities would encourage home sales and the development of affordable housing, while stressing the need to take a long-term view.
Short-term changes in the real estate sector have a significant impact on the entire Chinese economy.
Including related sectors such as construction, real estate once accounted for about 25% of China's GDP. Analysts at UBS estimated late last year that real estate now accounts for about 22% of the economy.
Premier Li Qiang said in a government work report last week that over the next year, China would “move more quickly to promote new development models of real estate.”
The English version of the report calls for “expanding the construction and supply of government-subsidized housing and improving the basic system of commodity housing to meet people's essential housing needs and diverse demands for better housing.” There is. Said.
