Original Title: The Central Bank’s Response to Evergrande Group’s Debt Crisis: Individual Phenomenon The real estate industry as a whole is a source of health: CCTV News Client
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On October 15, 2021, the People’s Bank of China held a press conference on financial statistics for the third quarter of 2021. Ruan Jianhong, Director and Spokesperson of the Investigation and Statistics Department, Sun Guofeng, Director of the Monetary Policy Department, and Zou Lan, Director of the Financial Markets Department attended the conference. Answer questions from reporters. A reporter asked at the meeting: The debt crisis of Evergrande Group has attracted widespread attention from domestic and foreign investors. We would like to ask how the People’s Bank of China views the credit risks faced by real estate companies? Are you worried about systemic risks?
The People’s BankZou Lan, Director of the Department of Financial Markets, said,The total assets of Evergrande Group exceed 2 trillion yuan, of which about 60% are real estate development projects, involving more than 1,000 project subsidiaries as independent legal entities. In recent years, the company has been poorly managed and failed to operate cautiously in accordance with changes in the market situation. Instead, it has blindly diversified and expanded, causing serious deterioration in its operating and financial indicators, and ultimately risking outbreaks.
Zou Lan introduced,Of the total liabilities of Evergrande Group, financial liabilities are less than one-third. Creditors are also relatively dispersed, and individual financial institutions have little risk exposure. On the whole, the risk of its spillover to the financial industry is controllable. Currently, relevant departments and local governments are carrying out risk disposal and resolution work in accordance with laws and regulations in accordance with the principles of rule of law and marketization, urging Evergrande Group to increase asset disposal efforts, speed up the restoration of project construction, and safeguard the legitimate rights and interests of housing consumers. In this process, the financial department will cooperate with the housing and urban-rural construction department and local governments to provide financial support for the resumption of the project.
Zou Lan said,The problem of Evergrande Group is an individual phenomenon in the real estate industry. After the macro-control of real estate in recent years, especially after the establishment of a long-term real estate mechanism, the domestic real estate market has maintained stable land prices, housing prices, and expectations. Most real estate companies operate steadily and have good financial indicators. The real estate industry is generally healthy.
(Edited by Zhao Hanqing)
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