BEIJING (Reuters) - Chinese regulators have asked financial institutions to extend more support to property developers to shore up the country’s struggling real estate sector, two sources with direct knowledge of the matter said on Sunday.
A notice to the institutions from the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) outlined 16 steps to support the industry, including loan repayment extensions, in a major push to ease the deep liquidity crunch which has plagued the property sector since mid-2020.
The move comes as cash-strapped property developers struggle to tap sources of funding to finish projects and pay suppliers.
Several developers have defaulted on their offshore debt obligations over the past year, fuelling a property downturn which has weighed on the world’s second-largest economy.
Chinese regulators are encouraging financial institutions to allow real estate companies to defer repayment of some loans, such as property development and trust loans, the sources said.
The sources quoted the notice as saying that if a loan is due to mature within six months, real estate companies can be allowed to defer repayments for one more year.
According to the notice, trust companies are also encouraged to provide financing for real estate firms on projects such as rental housing construction and mergers and acquisitions, the sources said.
The sources declined to be named because the notice was confidential. The PBOC and CBIRC did not immediately respond to Reuters’ requests for comment.