China is going to launch a real estate fund to help property developers in resolving a crippling debt crisis, which is aiming for a warchest of around 44 billion dollars in a bid to restore confidence in the industry.
The move will be marking the first major step by the state to rescue the beleaguered property industry since the debt problems became public in 2021. The size of the fund will initially be set at 80 billion yuan through the support from the Central Bank, the peoples Bank of China (PBOC).
A person familiar with the matter said, the state owned China Construction Bank will be contributing 50 billion yuan into the 80 billion yuan fund, but the money will possibly come from the relending facility of PBOC’s. A key pillar of the second-largest economy of the world, China’s property industry has been coming out from one crisis to another, and has also been a major drag on the growth over the year 2021.
Some of the analysts said, a fund will only provide a part of the solution. Larry Hu, chief economist of China at Macquarie, said they does not know details of the fund yet, and if only 80 billion yuan, then it will not be enough to solve the problem.
He believes that the fund will be a part of the bigger package to solve the current mortgage and debt crisis, because it alone will not solve all the problems, and they still need a real estate recovery.
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