China’s deputy central bank governor said on Friday that the huge real estate sector is recovering from a slump caused by tighter debt controls after a wave of developer defaults rocked global financial markets.
Pang Gongsheng mentioned Evergrande Group, the world’s largest indebted property developer, but did not provide an update on its government-controlled efforts to restructure 2.1 trillion yuan ($305 billion) of debt to banks and bondholders.
“Market confidence is being restored. The activity of transactions in the real estate market has increased. The financial environment, especially for high-quality companies, has improved significantly,” Pan said at a press conference ahead of the Chinese legislature meeting.
Ban gave no indication that Beijing plans to make major changes to its debt control, known as the “three red lines.”
China’s economic growth slowed in mid-2021 after regulators, concerned about dangerously high levels of debt, banned Evergrande and heavily indebted developers from borrowing more money. This exacerbated the crashes caused by antivirus restrictions.
Some developers have failed, while others have defaulted on billions of dollars of debt to Chinese and foreign bond investors. Evergrande said it has 2.3 trillion yuan ($330 billion) in assets but is struggling to convert it into cash to pay off creditors.
Local governments have taken over some of the unfinished projects so that families can get apartments that have already been paid for.
