Thousands of real estate projects in China are poised to secure financing through the newly introduced 'whitelist' financing initiative, as policymakers escalate actions to stabilize the property sector amid a growing liquidity challenge. As of January's conclusion, over 3,000 preferred projects from 170 cities across 26 provinces have been proposed to commercial banks, with approximately 17.86 billion yuan ($2.48 billion) in loans already designated for 83 of these projects.
Despite the introduction of the 'whitelist' financing program in China, analysts express skepticism about its effectiveness, citing banks' reluctance to lend to the struggling real estate sector due to concerns over developers' profits and asset quality. Critics argue that the new funding initiative may be deemed 'too little, too late,' given the potential funding gap for China's incomplete presold homes. While Beijing has implemented various support measures to bolster the real estate market, including lower mortgage rates and eased financing restrictions, the sector continues to face challenges. Property investment in 2023 declined by 9.6%, new construction starts dropped by 20.4%, and home sales by value decreased by 6.0%. China's largest developers recorded a significant slump in new-home sales in January, marking the worst month since at least July 2020.
Of the 3,218 projects on the whitelists, 84% belong to private builders and companies with diversified ownerships, including financially strained firms like Country Garden Holdings. China's leadership aims to reshape the housing system by offering more affordable government-funded housing, yet the sustainability of this effort is questioned amid local governments' fiscal challenges. China's central bank recently provided CNY150 billion of low-cost funds for lending to housing and infrastructure projects, part of its pledged supplementary lending facility, to support major projects, including government-subsidized housing and urban village renovation.