China invests $ 500 billion in a real estate crisis

China invests $ 500 billion in a real estate crisis

The Chinese real estate shares fell greatly on Thursday after the measures announced by the officials to strengthen the strangled real estate market were considered inadequate and not far -reaching enough.

economic challenges in China

After disappointing economic data in summer, which raised concerns that China may not be able to achieve its growth goal of 5 %, the state leader XI Jinping finally decided to lace up an urgently needed economic stimulus package. This package focused primarily on monetary measures in the last week of September.

expectations of the stimulus package

expert opinions on the measures

"The support measures in housing construction announced today are more incremental," said Larry Hu, chief economist for China at Macquarie, in an interview with CNN. "Although you can reduce the financial burdens for developers, you could not be enough to stabilize the real estate market." This was also the opinion of the investors, which led to a decline in the CSI300 real estate index by 5 % and the previous profits re-wounded.

measures by the Ministry of Housing

The Ministry of Housing and Rural Development said during the press conference that bank loans for selected real estate projects should be almost doubled to four trillion yuan ($ 561 billion) by the end of 2024. In January, China had presented a "whitelist" of construction projects that enabled the banks to provide this loan in order to successfully complete them and hand them over to the buyers.

trust in the real estate market

"We are confident in the recovery of the real estate market and will concentrate on implementation in the future," said Minister of housing construction Ni Hong. Xiao Yuanqi, deputy director of the financial supervision, added that the approved loans for the real estate projects on the "Whitelist" had already reached 2.23 trillion yuan ($ 313 billion) by October 16.

growing concern about the real estate sector

The ailing real estate sector is the cause of many of the economic problems of China. This sector once made up to 30 % of economic activities, while today it is about a quarter of the Chinese economy and 70 % of the household assets.

steps of the central bank to strengthen the economy

In September, the governor of the central bank, Pan Gongsheng, tried to react to the widespread concern of growth stagnation by announcing the reduction of one of his most important interest rates, the seven-day declining repo set, from 1.7 % to 1.5 %. In addition, the central bank lowered the minimum reserve requirement for banks by half a percentage point, which releases about 1 Billion Yuan ($ 142 billion) for new loans.

effects on the real estate market