Chinese authorities have made it clear that struggling real estate developers in China won’t be receiving substantial bailouts. This indicates that those who ‘harm the interests of the masses’ will have no choice but to face the consequences.
“For real estate companies that are seriously insolvent and have lost the ability to operate, those that must go bankrupt should go bankrupt, or be restructured, in accordance with the law and market principles,” Ni Hong, Minister of Housing and Urban-Rural Development, said at a press conference Saturday.
This stance reflects the government’s determination to tackle issues within the real estate sector without compromising public interests.
Minister Ni Hong warned that financially distressed companies should face bankruptcy or restructuring, with strict consequences for those found harming public interests.
“Those who commit acts that harm the interests of the masses will be resolutely investigated and punished in accordance with the law,” he said.
“They will be made to pay the due price.”
This warning comes as major developers like Evergrande and Country Garden face debt defaults and declining home sales.
Since 2020, Beijing has aimed to reduce debt reliance in real estate to curb speculation, leading to challenges for developers to complete projects due to financial constraints. While some financing measures have been announced, the government remains focused on diminishing the sector’s significance in the economy.
Real estate was once about 25% to 30% of China’s GDP, when including related sectors such as construction.
Last week, Premier Li Qiang’s report also emphasized the need for a new development model in real estate to meet housing demands.
Despite real estate’s decreased contribution to GDP, its fluctuations still significantly impact the economy.
