$446 Billion: The solution to China’s real estate panic

Beijing announced the two-pronged approach over the past few weeks, which have top-level political backing for financing equivalent to approximately 10% of annual new home sales in what media described as the “Singapore” model.

The plan is more of a longer-term structural adjustment in the property sector toward a Singaporean model,” said Betty Wang, senior economist at Australia & New Zealand Banking Group in Hong Kong. “I don’t think it’s just a short-term effort to boost property investment — instead, it’s about China’s 2035 common prosperity goals.”

Chinese regulators are quickly moving forward with the two projects – and have drafted a list of 50 developers eligible for a range of financing, according to people familiar with the matter. The list comprises both private and state-owned developers, who will vie for support from financial institutions loans, debt, and equity financing.

According to a recent statement from Beijing, China’s largest banks, brokerages and distressed asset managers were told during a Friday gathering to meet all “reasonable” funding needs from property developers, and to “treat private and state-owned developers the same” when it comes to lending. Regulators were also asked at the event to ensure that loan issuance to private builders doesn’t outpace the industry average rate, given that China’s outstanding property loans fell for the first time on an annual bases in Q3.