[The Epoch Times, November 30, 2022]After the “Twentieth National Congress”, the CCP has significantly increased its efforts to “guarantee handover” and rescue the property market. On November 21, the central bank and the China Banking and Insurance Regulatory Commission jointly held a national commercial bank credit work symposium. Pan Gongsheng, deputy governor of the central bank, said that the central bank will launch a 200 billion yuan “guarantee building” loan support plan for six commercial banks, providing commercial banks with Zero-cost funds to encourage them to support the work of “guaranteed delivery of buildings”.
On the 23rd, the “16 financial measures” that “support the stable and healthy development of the real estate market” were officially “unveiled” to the market, which was regarded as a symbolic action by the authorities to bail out the real estate industry. The direct goal of bailing out the real estate industry is to “guarantee the delivery of buildings.”
On the 24th, financial institutions including Industrial and Commercial Bank of China, Bank of China, and Postal Savings Bank of China, gave Country Garden comprehensive credit support of more than 150 billion yuan. Real estate companies such as Vanke and Longfor also intensively disclose such information. At present, 18 real estate companies have received comprehensive credit support of over 1.6 trillion yuan.
On the 25th, the central bank announced that it would cut the RRR by 0.25 percentage points on December 5th. It is expected to release about 500 billion yuan of long-term funds and reduce the annualized capital cost of financial institutions by about 5.6 billion yuan. This also helps to “guarantee handover” and the long-term property market.
In fact, in order to maintain the economic growth rate, the CCP has been under pressure to rescue the property market. In particular, at the end of June, the storm of “forced loan suspension” against owners of unfinished buildings first broke out in Jiangxi, which made the real estate industry with more and more defaulting enterprises and deteriorating financial risks (the ANZ Research Center once estimated that the collective suspension Home loan repayments could affect about $222 billion of mortgage loans on bank balance sheets, or about 4% of outstanding mortgage loans).
And what about the CCP? We attach great importance to this matter from a political perspective, and link “guaranteeing the delivery of buildings” with “protecting people’s livelihood and ensuring stability” (such as the meeting of the Political Bureau of the Central Committee on July 28) as a key task.
But why are there so many unfinished buildings in China? It is because the building construction funds on the mortgage account have been withdrawn. Will proof of funds be withdrawn? Doesn’t the CCP have a whole set of regulatory measures? The problem is that the regulatory measures are all ostentatious, and local governments, banks, and real estate companies are colluding to dig holes for home buyers intentionally or unintentionally.
To “guarantee handing over the building”, go and recover the money that was taken away! However, the money was either hacked or misappropriated and it was impossible to get it back. Local governments, banks, and real estate companies are throwing blame at each other and playing hooligans. Anyway, if they want money, they will die.
So, who will fill such a big hole? The central government has no money at hand, especially when the “Twentieth National Congress” is approaching, so it treats “guarantee building” as a political task and presses it to the local governments. The local government has no money, and it is impossible to fill the hole in the “Baojiao Building”, but they can’t resist clearly, so they just practice and grind. Some media have counted the “move-outs” in 36 days in 44 days, and found that “supervision of pre-sale funds” is the most important content, and the number of mentions accounts for more than 30%; more than 20% of the policy content is “establish a working group” or implement “One building, one policy”, local government departments come forward to resolve problem real estate. Another policy of over 10% was proposed to provide financial support for “guaranteed delivery buildings”. The first two are false; the third is real, but it is false when it is implemented. For example, Zhengzhou, Henan, and Nanning, Guangxi have set up real estate bailout funds. The current scale is 10 billion yuan and 3 billion yuan respectively, which is a drop in the bucket . The resumption of unfinished buildings in various places is mostly performances. The most prominent one is in Zhengzhou, Henan, where a 30-day campaign of “smashing pots and selling iron and building buildings” was held. It was like setting off firecrackers.
The central government also knows the tricks of the local governments, but the central finance has neither the will nor the ability to take the blame for the local governments, because it is afraid of preventing financial risks and dare not let go of financial policies. It’s just that no one wants to take out real money. On August 19, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the Central Bank issued special measures to support some cities in promoting the construction and delivery of overdue and difficult-to-deliver residential projects in the form of special loans from policy banks, with limited effect.
Therefore, “Baojiao Building” has not made much substantive progress so far. Relevant data from the National Bureau of Statistics of the Communist Party of China (see Table 1) make this clear: In 2022, the decline in national real estate development investment and residential investment will accelerate, and the decline in the completed housing area and residential completed area will be two digits. The number reached its peak in the second quarter, and then converged in the third quarter and October, but the range was very small; the proportion of residential investment in real estate investment was stable at 3/4, and the proportion of completed residential area to completed area was between 71.36% and 73.44%. fluctuate slightly.
Table 1: 2022 National Real Estate Development Investment and Housing Completion Area Table
Unit: Investment – 100 million RMB Area – 10,000 square meters
|real estate investment||growth rate||housing
|growth rate||Residential completed
Data source: National Bureau of Statistics
From this, we can draw a conclusion: so far, “Baojiao Building” has been mired in a quagmire.
If we analyze the data from 2019 to 2021, we can find that the completed housing area from October to December accounted for more than half of the whole year (51.27% in 2019 and 54.68% in 2020); but in 2021, it dropped sharply to 35.70%. It shows that after the thunderstorm of Evergrande that year, the real estate development investment in the fourth quarter was seriously insufficient, which has already indicated the severe situation of unfinished buildings in 2022.
It is precisely because there has been only a little drizzle in the past few months, and the floor has not been wet. There is no progress in “guaranteeing the delivery of the building”. Beijing was in a hurry, so it forced the financial system to rescue the market and issued the “Sixteen Financial Measures” to grant large-scale bank credit to real estate companies.
However, it can be seen clearly at home and abroad: residential sales continued to decline sharply. From January to October, the sales area of commercial housing was 1,111.79 million square meters, a year-on-year decrease of 22.3%, of which the residential sales area decreased by 25.5%; the sales volume of commercial housing was 10,883.2 billion yuan, a decrease of 26.1%, of which the residential sales decreased by 28.2%.
And as long as the market fails to recover, all financial support will turn into speculation, and “guaranteed housing” cannot be maintained, and “rescue the market” will instead become “harm to the market”. So can the property market pick up in 2023? Judging from the current tense political, economic and social situation, it is difficult to find optimistic people.
The Epoch Times
Editor in charge: Gao Yi