China’s ailing property sector is proving to be a tough repair job. Policymakers are digging deeper into the toolbox, but a lack of faith in the industry’s foundations make it harder to rebuild, says JennHughes13
, have this year swapped offshore debt coming due for new notes, according to Goldman Sachs research. Most of those bonds still trade at or below 30% of face value, implying that investors aren’t convinced the extensions improve their chances of being paid back. Small wonder: four of them have defaulted since exchanging.Without stabilising the developers, it’s hard to see how boosting demand will make much difference.
Chiseling away at the effects of a runaway housing market cries out for stiffer resolve. Beijing is capable, evidenced by the strict leverage curbs it imposed on developers in the first place. Circumstances have changed, though, and cheaper mortgages will achieve only so much. If China is serious about wanting to buttress property developers, it’ll take a bolder economic blueprint.- China’s central bank on May 20 lowered the benchmark five-year lending rate to 4.45% from 4.
- Residential property sales fell 32% in the first four months of 2022 from a year earlier, according to figures released on May 19 by China’s National Bureau of Statistics.Editing by Jeffrey Goldfarb and Katrina HamlinOpinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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