China’s measures to shore up its indebted property sector

Nov 8 (Reuters) – Chinese authorities have asked Ping An Insurance Group to take a controlling stake in embattled Country Garden (2007.HK), the nation’s biggest private property developer, sources said.

A state-engineered rescue of Country Garden by Ping An would be one of the most significant interventions to date by authorities to support the cash-squeezed and highly indebted property sector, which accounts for one-quarter of China’s economic activity and has sparked fears of a broader financial crisis.

The following is a timeline of key measures authorities have taken this year.

Nov. 8 – Central bank Governor Pan Gongsheng said he would encourage financial institutions to keep bond and credit financing channels open to help address real estate sector weakness.

Nov. 7 – Shenzhen’s state asset regulator and state-owned Shenzhen Metro pledged support for China Vanke (000002.SZ) with Shenzhen Metro saying it has prepared more than 10 billion yuan ($1.4 billion) worth of “market tools” to help with cashflow. Both are key shareholders in the developer.

Oct. 31 – China vowed to satisfy all reasonable financing needs of developers, regardless of whether they are private or state-owned firms. The statement was made at the Central Financial Work Conference, a twice-a-decade policy meeting.

Sept. 14 – China’s central bank said it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity.

Sept 1. – China is set to take further action, sources said. Proposed measures include lifting home-purchasing curbs in non-core districts of major cities such as Beijing, Shanghai and Shenzhen and gradually removing price caps on new homes, they said.

Aug. 31 – China’s central bank and financial regulator ease some borrowing rules for homebuyers, including lowering existing mortgage rates for first-home buyers and the down payment ratio in some cities.

Aug. 30-Sept. 1 – Major Chinese cities say they will allow people to take preferential loans for first-home purchases regardless of their credit record.

Aug. 25 – Local governments are permitted to scrap a mortgage rule so that people who have bought a home but then sold it having repaid their mortgage, can get preferential loans as first-time homebuyers, according to state media Xinhua.

Aug. 25 – China’s cabinet approved guidelines for the planning and construction of affordable housing.

Aug. 21 – China cut its one-year benchmark lending rate.

July 24 – China’s top leaders held a Politburo meeting and omitted the phrase “housing for living, not for speculation” in the official readout.

July 21 – The cabinet approved guidelines on transforming “urban villages” or underdeveloped areas in megacities, which will help underpin property investment.

July 10 – China’s central bank extended until the end of 2024 some policies in a November rescue package to shore up the real estate sector.

June 20- China’s central bank cut its key lending benchmarks, or loan prime rates (LPRs), for the first time in 10 months.

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