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China state banks earmark over $8bn for property projects

China state banks earmark over $8bn for property projects
An aerial view of China Evergrande Group's Riverside Palace development under construction in Taicang, Jiangsu province, China, on Friday, 24 September 2021. (Photo: Qilai Shen/Bloomberg)

China’s state-owned lenders have earmarked at least 60 billion yuan ($8-billion) of loans for property projects eligible for support, heeding Beijing’s call to boost lending to the beleaguered housing market. 

Agricultural Bank of China approved more than 40 billion yuan of loans for property projects on white lists, the lender said in a statement Monday. China Construction Bank Corp. extended 3 billion yuan to five property projects, with more than 20 billion yuan of approved loans in the pipeline, it said late on Friday

Local branches of Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. also moved to offer financing support to some projects, according to statements over the weekend. They didn’t reveal the total amount of loans that had been extended or were being planned.

The announcements came after Beijing urged local authorities last month to better support financing needs of developers and draft lists of eligible projects. Legislators ordered banks to step up lending to the property sector, which saw credit growth last quarter slow to the weakest in more than a year, undermining the ability of developers to complete homes. 

By establishing a “coordination mechanism”, central government officials asked major banks to approve a white list of property projects and requested local authorities to ensure progress. A range of housing projects from cash-strapped developers including Country Garden Holdings and Sunac China Holdings have been put on the white lists, the firms have said. 

The big four state lenders all vowed to actively meet “reasonable financing demand” of developers and eligible projects under the coordination mechanism.

Authorities are struggling to arrest a slowdown in China’s property market, which saw new home sales last month tumble 34.2% from a year earlier. 

Still, signs of improvements emerged during the week-long Spring Festival holiday, with sales of existing homes in 50 key cities rising more than 70% from a year earlier according to Beike Research Institute.

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