Evergrande: China urges banks to stabilize real estate

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Beijing (AFP)

China’s central bank has urged the country’s banks to stabilize the housing market and fight speculation amid fears that a bankruptcy of indebted giant Evergrande will rock the entire real estate industry.

Strangled by a debt of 260 billion euros, the private group has been struggling for several weeks to honor its interest payments and deliveries of apartments.

But the juggernaut remains on the brink and its potential bankruptcy could rock the Chinese real estate sector, or even the national or global economy.

In a meeting on Wednesday, the central bank called on financial institutions to “stabilize land and house prices” and “not to use real estate as a means of stimulating the economy in the short term,” according to a communicated.

She also stressed that “housing is used for housing, not for speculation”.

The summary of the meeting, held with the banking and insurance regulator, does not specifically mention Evergrande.

But it is a signal that the authorities are worried about the repercussions of a possible bankruptcy of the developer on the real estate sector, already battered in recent months by a regulatory tightening intended to curb debt.

Faced with the risk of social unrest in the event of Evergrande defaulting on payment, the Chinese government has not yet indicated whether it intends to intervene or not to help or restructure the group.

Police officers frame protesters gathered outside Evergrande headquarters in Shenzhen on September 16, 2021 Noel Celis AFP/Archives

However, there are signs that the authorities intend to prevent any manifestation of discontent.

Several discussion groups on the WeChat application, which bring together investors or apartment owners harmed by Evergrande, have been deleted or blocked since Monday, two of their members told AFP.

Hundreds of people have demonstrated in recent weeks in front of Evergrande offices in several regions of the country to demand the completion of the work or the reimbursement of sums already paid.

“Several members of our WeChat group have been summoned by the police” in Shenzhen (south), the city where the promoter is located, an investor wishing to remain anonymous told AFP.

Evergrande has also already started to shed certain assets. The group wishes in particular to sell a stake of 1.5 billion dollars (1.3 billion euros) in a regional bank.

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