Recently it was reported that China's financial regulators will announce"White list of 50 real estate companies"to encourage financial institutions to provide loans to real estate enterprises. This may be to provide working capital to solve the problem of "guaranteed delivery" of buyers who have paid but cannot deliver the house, as well as the problem of delivering materials or undertaking projects to real estate enterprises but not being paid.
In addition to financial institutions, there are many stakeholders such as the public, construction and materials and other stakeholders who buy apartments. With so many stakeholders, it is difficult to determine who will bear the final losses and how. At the same time, in order to simplify the relationship of interests, it is necessary to solve the problem of "guaranteed delivery". Some experts estimate that the funding gap of real estate enterprises to "guarantee the delivery of buildings" may be about 4 trillion.
China could establish a system similar to Japan's "delivery of treasury bonds" designed to compensate for the losses caused by the Fukushima nuclear disaster, to help real estate developers deal with unfinished projects. The delivery of government bonds is a system in which bonds are issued by ** but no proceeds are received from the issuance (Note). In other words, since they will not be converted into cash for the time being, they will not affect the supply and demand of the capital market. But they can also be used as collateral for bank loans.
Experts say that if it is decided to create a system similar to the delivery of Japanese government bonds, then financial institutions will be willing to lend money. These bonds will become collateral for bank loans, giving banks more capital to lend. In this way, real estate companies can get the funds they need to complete unfinished projects.
The benefits of such an approach are clear. First of all, it solves the problem of capital shortage of real estate enterprises and avoids large-scale bankruptcy and bankruptcy. Secondly, it protects the interests of home buyers and businessmen and avoids greater economic losses. Finally, it provides an effective way to solve the problem of "guaranteed delivery", and also avoids the generation of social instability.
However, there are some challenges to this approach. First of all, it is necessary to establish and improve relevant systems and regulations to ensure the smooth implementation of this program. Secondly, there is a need to monitor and manage the programme to prevent possible abuses and corruption. Finally, it is important to ensure that this option does not negatively impact existing financial markets.
Overall, the establishment of a system similar to Japan's delivery of government bonds is a feasible solution to the current problem of "guaranteed delivery" faced by China's real estate market. However, policies and regulations need to be carefully considered and developed to ensure the smooth and successful implementation of this program.