As the government focuses on accountability and market forces in the face of fiscal woes, Chinese authorities have made it clear that struggling real estate developers should not expect large-scale bailouts, CNBC reports. sending a message.
Housing and Urban-Rural Development Minister Nee Hong said at a press conference that bankrupt companies must face the consequences of bankruptcy or restructuring, and warned that companies that harm the interests of the public will be punished.
These remarks were made at China's annual congress and reflect the government's position amid defaults by major developers such as Evergrande and Country Garden.
Mr Nee Hong's comments underline the government's determination to address challenges within the property sector, which has been plagued by debt defaults and a drop in new home sales.
The Chinese government's crackdown on developers' heavy reliance on debt for growth since 2020 was aimed at curbing speculation in the property market.
However, the crackdown has further exacerbated the industry's problems, with many developers unable to complete construction projects due to financial constraints.
Although authorities have taken steps to provide loans to some developers, they remain committed to reducing the role of real estate in the economy.
This year's annual government meeting highlighted that China is focusing less on the real estate sector and more on investing in high-end manufacturing capacity than in previous years.
While discussing “civil livelihoods,'' Mr. Nihong emphasized the importance of long-term consideration and the promotion of home sales and affordable housing development.
The significant impact of real estate on China's overall economy cannot be understated, with the sector, including related sectors such as construction, once accounting for around 25% of GDP.
Premier Li Qiang's government work report for next year emphasized the need to foster a new development model for real estate, focusing on expanding the supply of government-subsidized housing and improving the basic system of commodity housing to meet diverse housing demands.
These efforts reflect the government's commitment to ensuring access to housing while moving towards a more sustainable economic model.The English version of the report highlighted the government's efforts to meet people's essential housing needs.
