China’s real estate industry employs many construction workers, who often live in nearby temporary housing.
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BEIJING — Chinese authorities say there will be no massive bailout for the country’s troubled property developers, warning those who “harm the interests of the masses” will be punished.
Ni Hong, Minister of the Ministry of Housing and Urban-Rural Development, said that if real estate companies that are seriously insolvent and lose their operating capabilities must go bankrupt, they should go bankrupt or reorganize in accordance with legal and market principles. development, said at a press conference on Saturday.
Any behavior that harms the interests of the masses will be resolutely investigated and punished in accordance with the law. “They will be forced to pay the price they deserve.”
That’s according to a translation of his Mandarin speech released by CNBC in the official transcript of a press conference held during China’s annual Two Sessions.
Ni’s comments came as major property developers from Evergrande to Country Garden defaulted on their debts and a collapse in new home sales cast doubt on the future of their business.
In 2020, Beijing cracked down on developers that rely heavily on debt for growth in an attempt to curb speculation in the real estate market. But many developers quickly ran out of money to build apartments, which were often sold to Chinese buyers before they were completed. Some buyers are using boycotts to stop paying their mortgages.
The authorities have since announced measures to provide financing to some developers. But the state’s stance on reducing the role of real estate in the economy has not changed.
This year’s annual government meeting emphasized the country’s priority investment and building high-end manufacturing capabilities. In contrast, the leadership has not mentioned much about the huge real estate industry.
Last week, real estate barely appeared at a press conference focused on the economy, while Ni was speaking at a conference focused on “people’s livelihood.”
Ni said the authorities would promote housing sales and the development of affordable housing, while stressing the need to consider longer-term issues.
Recent changes in the real estate industry have a significant impact on China’s overall economy.
When including construction and other related industries, real estate once accounted for about 25% of China’s GDP. Analysts at UBS estimated late last year that real estate now accounts for about 22% of the economy.
Last week, Premier Li Qiang stated in his government work report that in the new year, China will “accelerate the cultivation of new models of real estate development.”
The English version of the report states, “We will expand the construction and supply of affordable housing, improve the basic system of commercial housing, and meet the people’s basic housing needs and different levels of good housing needs.”
