China’s central bank head dissuades real estate woes as Vanke teeters towards default

The head of China’s central bank has said the country’s property market has shown ‘positive signals’ despite uncertainty the worst has passed

Vanke, a major developer, saw its credit rating demoted as other firms tangle with solvency questions

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Pan Gongsheng, governor of the People’s Bank of China, has reassured executives the country’s property sector is showing signs of recovery. Photo: Reuters

Published: 6:00pm, 26 Mar 2024

The governor of China’s central bank talked up the country’s property market and the resilience of its financial system on Monday, as the debt pressures weighing on a leading developer have spawned more worries the crisis in the sector has yet to reach its conclusion.

At a closed-door meeting with representatives of domestic and overseas financial institutions, Pan Gongsheng said real estate – long a bellwether for the economy at large – has shown “positive signals”.

“It has a solid foundation for long-term healthy and stable development,” he said during the China Development Forum, which drew dozens of executives from major multinationals including tech giant Apple.

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“Property market volatility has a limited impact on China’s financial system,” he added, according to a statement posted on the website of the People’s Bank of China (PBOC).

His comments came as China Vanke battles rumours of default, with credit rating agencies Moody’s and Fitch demoting the company’s status to below investment grade.

The downgrade further darkened the shadow looming over the sector, initially precipitated by revelations of financial trouble for China Evergrande, Country Garden and many other developers.

Real estate, once a pillar industry contributing around a quarter to national economic output, has grappled with a liquidity crisis since 2021, when Beijing’s “three red lines” policy restricted borrowing in the highly leveraged field.

China’s central bank head dissuades real estate woes as Vanke teeters towards default

The head of China’s central bank has said the country’s property market has shown ‘positive signals’ despite uncertainty the worst has passed Vanke, a major developer, saw its credit rating demoted as other firms tangle with solvency questions

The head of China’s central bank has said the country’s property market has shown ‘positive signals’ despite uncertainty the worst has passed

Vanke, a major developer, saw its credit rating demoted as other firms tangle with solvency questions