On Wednesday, China’s Bank of Communications Co Ltd (BoCom) announced a credit line of 100 billion yuan ($13.98 billion) for developer Vanke. This is the latest sign that the struggling property market will be helped.
The Chinese government has recently announced a lot of financial measures to help developers with a lot of debt and to stop a very bad housing slump. The real estate market accounts for roughly one-quarter of the economy.
By sales, Vanke is the second-largest developer in the country.
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A statement from the lender says that as part of the deal, BoCom will likely offer Vanke loans for property development, mortgages, and mergers and acquisitions.
It also said that the lender would give the builder money through letters of guarantee and bond investments.
In a statement, the bank said that the agreement was part of its efforts to implement 16 measures suggested by Chinese regulators to help the real estate market.
“BoCom will continue to do its job as a state-owned bank and promote high-quality economic growth with high-quality financial services,” the statement said.
In a separate statement from Wednesday, the bank also said it would give Midea Real Estate Holding Ltd. a 20 billion yuan line of credit.
China’s property market, which was once a key driver of growth, has slowed down a lot this year because the government is trying to stop developers from borrowing too much money,
The crackdown has led to a drop in property investments, sales, and prices, as well as a rise in the number of bonds that aren’t paid back. Many housing projects have stopped being built, which scares away people who want to buy a home.
China’s central bank will give 200 billion yuan in loans to six commercial banks for housing completions, a deputy central bank official told the state-run Economic Daily on Monday. This is the latest policy change.
But many experts think it will take a long time for the real estate market to get back on its feet.
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$1 = 7.1531 Chinese yuan (renminbi)