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MNI BRIEF: China Should Support Developers Continued Operation

MNI (Singapore)
MNI (Beijing)

Authorities must focus on supporting the continued and stable operation of most real-estate companies, especially leading private developers, by easing their access to liquidity to ensure the delivery of unfinished housing projects, said Yi Gang, former governor of the People’s Bank of China on Thursday.

Speaking to the Chinese People's Political Consultative Conference, Yi suggested authorities allow developers to use a certain proportion of pre-sale regulatory funds, which will unleash about CNY1 trillion to use immediately.

The Ministry of Finance, or the PBOC, can withdraw 1% of the outstanding pre-sale funds, estimated at about CNY10 billion a year, to set up an insurance mechanism. The insurance will pay compensation in advance up to the limit of the pre-sale funds used by the developer if they fail to complete their projects, he said.

The proposal initially considers a three-year period (2024-2026), with a total extraction of the pre-sale funds of about CNY30 billion, and authorities should strive to transition to sell mainly existing homes, Yi added. (See MNI: China's Mega Cities To Ease Homebuying Limits Progressively)

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