The paradox of the Chinese Communist Party is that it is unelected but, at times, more responsive to public sentiment because it fears revolution. So, today, we get the rapid response to the emergence of “jingle mail” in its crashing property market.
Yesterday we saw the PBoC pledge more of nothing but other regulators stepping in:
Chinese regulators stepped up efforts to encourage lenders to extend loans to qualified real estate projects as the beleaguered property sector faced fresh risks from a widening mortgage-payment boycott on unfinished houses.
There are 1249 words left in this subscriber-only article.
The China Banking and Insurance Regulatory Commission (CBIRC) told the official industry newspaper on Sunday that banks should meet developers’ financing needs where reasonable.
China may allow homeowners to temporarily halt mortgage payments on stalled property projects without incurring penalties, people familiar with the matter said, as authorities race to prevent a crisis of confidence in the housing market from upending the world’s second-largest economy.
Under a yet-to-be-finalized proposal from financial regulators, hundreds of thousands of buyers of stalled homes would be allowed to pause mortgage payments with no impact on their credit scores, the people said, asking not to be identified discussing a private matter. The plan is part of a broader push to stabilize the property market that includes urging local governments and banks to plug some of the funding shortages at developers, the people said.
Will these measures do anything? On the banks, it will help if its works. But whether it will is doubtful. Banks have been under this instruction for many months. Would you extend extra credit to the ponzi-developers today?
For buyers, I’m not confident, either. This reeks of desperation and that’s hardly confidence-building for investors that are already underwater, let alone mulling new investment.
The fundamental problem remains the same. Xi Jinping has popped the property psychology balloon. Returns are guaranteed only to fail and nobody has any faith in project delivery anyway.
Developers are fooked:
And then there is OMICRON:
In the year ahead, Chinese property still looks much more likely to be the epicentre of a global crisis than it does any kind of saviour:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
