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Updated January 25th, 2024 at 15:28 IST

China urges active financing support for property projects

Financial institutions in China are being urged to aggressively fulfil acceptable funding requests for real estate projects.

Business Desk
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Flag of China | Image:Pixabay
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China urges financial support: In a bid to navigate the challenges posed by the sustained downturn in the real estate sector, China's financial institutions are being encouraged to proactively meet reasonable financing demands for property projects, according to an official statement from the National Financial Regulatory Administration (NFRA) on Thursday.

Xiao Yuanqi, Deputy Director of the NFRA, emphasised that financial institutions should not hastily withdraw or curtail loans for eligible property projects facing temporary difficulties in construction. The real estate sector, which constitutes about a quarter of China's economy, has been grappling with a prolonged slump that could impact the broader economic recovery.

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Addressing the needs

To address financing needs and support property purchases, local governments and housing authorities are urged to optimise policies related to down payment ratios and mortgage rates, Xiao stated during a news conference.

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The outstanding value of real estate development loans stands at approximately 12.3 trillion yen, with mortgage loans totaling around 38.3 trillion yen, according to Xiao.

In addition to focusing on the real estate sector, Xiao affirmed China's commitment to stringent supervision of high-risk small and medium-sized banks to mitigate financial risks. The non-performing loans (NPLs) at banking and financial institutions reached 3.95 trillion yen at the end of 2023, with the NPL ratio recorded at 1.62 per cent, as reported by Liu Zhiqing, Director of the regulator's statistics and risk monitoring department.

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Despite the challenges, commercial banks saw a 3.2 per cent increase in net profits last year, highlighting a degree of resilience in the financial sector amid evolving market conditions. The ongoing efforts to balance support for the property market with financial stability underscore China's commitment to navigating the complexities of its economic landscape.

(with Reuters inputs)

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Published January 25th, 2024 at 15:28 IST

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