China pledges more financial support for ‘whitelist’ real estate projects

China will expand its “whitelist” of real estate projects and speed up bank lending for these unfinished developments to 4 trillion yuan ($561.8 billion) by the end of the year, the country’s housing ministry said Thursday.

Ni Hong, China’s minister of housing and urban-rural development, made the announcement at a press conference, alongside officials from the central bank, finance ministry and the National Financial Regulatory Administration.

A total of 2.23 trillion yuan had already been approved in loans to whitelisted developers. That figure will almost double to 4 trillion yuan by the end of 2024, according to a senior official from the financial regulatory administration.

Launched in January, China’s “whitelist” initiative allows city governments to recommend residential projects to banks for speedier lending. The intent was to ensure the completion of unfinished housing projects so they could finally be delivered to buyers.

All commercial housing projects are now eligible for the “whitelist” project, Xiao Yuanqi, vice minister of the administration said Thursday. The move is expected to broaden the list.

Xiao also stressed that banks should deploy funds “as soon as possible,” saying they could release the loans in full to developers rather than in tranches, according to CNBC’s translation of the Chinese.

The briefing was the latest in a series of high-level government policy announcements aimed at bolstering the economy.

In late September, Pan Gongsheng, the People Bank of China governor announced a 50 basis-point cut to the amount of cash banks need to have on hand, known as the reserve requirement ratio or RRR. He also lowered the minimum down payment for second-home loans nationwide from 25 percent to 15 percent.

Days later, officials in a top-level meeting, chaired by Chinese president Xi Jinping, pledged to “halt the real estate market decline and spur a stable recovery.”

Disappointing briefing?

The officials on Thursday’s briefing appeared to be mostly “fine-tuning existing policies,” Bruce Pang, chief economist and head of research of Greater China at JLL, said. “It will take time for the improvement on sales volumes and prices to be translated into property investment and construction.” 

Some investors saw the recent flurry of activity as a sign that Beijing was finally ready to take drastic measures to stimulate growth, and they had hoped for more stimulus measures from the briefing. As Xiao was speaking, Chinese CSI 300 real estate index dropped over 5%, in a sharp turnaround from gains of around 8.7% in the previous three trading sessions.

Volatility in the Chinese stock market is likely to continue as investors “lack conviction that the stimulus package and what’s been announced is going to turn around things,” said Chi Lo, senior economist at BNP Paribas…