China’s central bank deputy governor said Friday that the huge real estate sector is recovering from the recession caused by tightening debt controls, after a wave of developer defaults caused violent tremors in global financial markets.
Pan Gongsheng mentioned Evergrande Group, the world’s largest indebted real estate developer, but did not provide an update on its government-supervised efforts to restructure 2.1 trillion yuan ($305 billion) of debt to banks and bondholders.
“Market confidence has recovered. Transaction activity in the real estate market has increased. The financing environment, especially for high-quality companies, has improved significantly,” Ban told a press conference before the meeting of China’s legislature.
Ban gave no indication that Beijing planned to make major changes to its debt controls, known as the “three red lines”.
China’s economic growth slowed in mid-2021 after regulators concerned about dangerously high debt levels stopped Evergrande and heavily indebted developers from borrowing more money. That added to the disruptions caused by anti-virus restrictions.
Some developers have also collapsed and others defaulted on billions of dollars in debt to Chinese and foreign bond investors.
Evergrande said it had 2.3 trillion yuan ($330 billion) in assets but was struggling to convert that into cash to pay off lenders.
Local governments have taken over some unfinished projects to make sure families get apartments that have already been paid for.
