Yicai:

The PBC and the China Banking and Insurance Regulatory Commission (CBIRC) jointly issued the 16-point set of financial measures at the end of last year in a bid to ensure the property market's stable and healthy development. Could you please share with us information regarding the implementation of these measures? Thank you. 

Pan Gongsheng:

Thank you for your question. Before answering it, I'd like to briefly discuss the background of the issue and relevant policies from a broader perspective. 

The CPC Central Committee has attached great importance to the healthy development of the property market. Since the 19th CPC National Congress, the CPC Central Committee has made clear its guidelines and policies for regulating the real estate sector, namely, adhering to the principle that housing is for living in and not for speculation, ensuring the long-term mechanism of keeping land costs, housing prices and market expectations stable, and implementing city-specific measures to facilitate positive circulation and sound development in the real estate sector. Under the leadership of the CPC Central Committee and the State Council, departments and lobal governments have ensured the implementation of the long-term mechanism of the real estate sector. This has helped curb the rapid expansion of the sector, sharp increases in housing prices, and real estate bubbles. 

Since the second half of 2021, some real estate enterprises, such as Evergrande, have been facing high risks with their balance sheets, because they have long been running business with a strategy characterized by “high leverage, high debt and high turnover.” As a result, they found it difficult to continue their business, which led them into crisis. Moreover, the average level of the medium- and long-term property market demand dropped, and the pandemic continued for three years and negatively impacted employment and income expectations. Given the multiple aforementioned factors, the spillover of the real estate sector's risks has increased.

Given the new situations in the real estate sector, the PBC, following the deployments of the CPC Central Committee and the State Council, released the 16-point set of financial policy measures at the end of last year to ensure the sound and stable development of the real estate sector. We have worked with departments concerned to step up efforts on both the supply and demand sides to promote the stable development of the sector. 

On the demand side, differentiated real estate credit policies have been implemented in places according to varied conditions, promoting declines in real lending rates and down payment ratios to provide more support for those buying their first homes or improving their housing situation. In December 2022, the average interest rate for newly issued individual housing loans was approximately 140 basis points lower than the level at the end of the previous year. The minimum down payment ratio allowed by local policies in most cities, apart from several hotspot cities, has reached the lowest national level. 

On the supply side, we have promoted the implementation of the 16-point set of measures to ensure the stable and healthy development of the real estate sector. We have implemented the program to improve the balance sheets of high-quality real estate enterprises, prevented financial institutions from getting overly risk-averse, and guide them to provide normal financing services. Real estate developers have been included in a program that supports private companies' bond financing. As such, financing in the real estate sector has been stable and in an orderly manner. We have rolled out 350 billion yuan of special lending set aside for presold projects' delivery, and set up a 200-billion-yuan loan support program for the same reason and a 100-billion-yuan loan support program for rental housing. We have made great efforts to guide financial institutions to promote mergers and acquisitions in the property sector, thereby accelerating the clearing up of risks by giving full play to the role of the market.

With the easing epidemic situation and the adjustment of the pandemic prevention and control measures, the policies put in place earlier have been able to bring greater positive influence and work more effectively. The recovery of market confidence has recently accelerated, and transactions in the real estate market have increased. Moreover, the financing environment of the real estate sector, especially high-quality real estate enterprises, has significantly improved. I'd like to share some figures. From September to December last year, real estate development loans increased by 230 billion yuan, 420 billion yuan more than in the same period in the previous year. In the fourth quarter, real estate companies issued 120 billion yuan of domestic bonds, up 22% year on year. In January this year, new loans for real estate development exceeded 370 billion yuan, an increase of 220 billion yuan year on year; 40 billion yuan of domestic real estate bonds were issued, up 23% year on year.

With China's ongoing urbanization, its residents and families have a great deal of demand potential for housing improvement. Moreover, the model of encouraging both housing rentals and purchases has great potential. Going forward, we will implement the deployments made by the 20th CPC National Congress and the Central Economic Work Conference, upholding the principle that housing is for living in and not for speculation. We will sum up experience and draw lessons from the development of the Chinese real estate sector and work with financial departments concerned to ensure the implementation of policies that have already been released. By doing so, we aim to support people in buying their first homes or improving their housing situation, help satisfy new urban residents' housing demand, and facilitate a housing market that prioritizes both housing rentals and purchases. We will improve the foundational system of real estate finance and the macro-prudential management system to promote the smooth transition of the real estate industry to a new development model. Thank you.