China mulls plan to improve balance sheets of good-quality developers

BEIJING -- Chinese authorities have drafted an action plan to improve the balance sheets of good-quality real estate developers, sources from relevant government departments told Xinhua.

The plan has specified 21 tasks to prevent risks from spreading to good-quality real estate firms and improve their operating and financing cash flows with comprehensive measures, said the sources.

Financial authorities will encourage financial institutions to negotiate with good-quality developers over financing extensions on a reasonable basis, increase financing support via loans and bond issuance, and provide policy support on foreign exchange management.

Under the plan, a supporting program will be introduced to provide 100 billion yuan ($14.86 billion) of loans for rental housing by encouraging some cities to pilot market-based bulk purchases of existing housing stock to boost rental housing supplies.

While stepping up the implementation of previously announced policies to secure the delivery of pre-sold housing, China will also set up a special refinancing program for national financial asset management companies, so that they will participate in the sector's restructuring and mergers in a market-based way to clear risks, according to the plan.

The action plan will target good-quality developers with a relatively large scale of operation and certain systemic importance. It did not give specific names of the developers, and financial institutions are allowed to make their own decisions on the firms.

At a symposium earlier this week, China's central bank and top banking regulator stressed the implementation of city-specific housing loan policies, enhancing financial support for rental housing, and providing housing-related financial services for the new citizens and young people.