Beijing is giving Chinese banks another nudge to persuade them to play the property white knight. Regulators including the People’s Bank of China are drafting a “whitelist” of 50 property developers, including state-backed China Vanke (000002.SZ) and fully private ones like Seazen (1030.HK) and Longfor (0960.HK), Bloomberg reported citing unnamed sources. The move seems aimed at giving financial institutions more confidence in lending to the struggling sector. It’s unclear whether more distressed players like Country Garden (2007.HK) would be included. More importantly, barring specific lending targets, banks are likely to remain in wait-and-see mode because they fear getting stuck with a mountain of bad loans.
A 50-name-long whitelist would be the widest net cast by policymakers so far, reflecting the intense pressure to prevent a rout as housing sales continue to slump. Such unofficial lists have been widely circulated before without great success. Last December, Chinese banks pledged new credit lines worth around 3 trillion yuan ($424 billion) to a dozen developers deemed worth saving, following a similar effort by Beijing. It didn’t prevent the then white-listed Country Garden and others from slipping into restructuring this year.
The draft also follows a Friday meeting where regulators asked banks to ensure that loan issuance to private builders “grows at the same rate as the industry average”, according to Bloomberg. But at a time when China’s outstanding property loans are contracting, such vaguely worded guidance loses relevance. The drip-drip of support is better than nothing. But the risk is that few play along. (By Yawen Chen)
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