Beijing Takes More (Inadequate) Steps to Remedy China’s Property Crisis

Commentary
Beijing has taken another step to address its stubborn property crisis and the financial fallout from it.
The aim is to alleviate the estimated 3.2 trillion yuan ($446 billion) funding gap among the nation’s property developers and, thus, lift the burden on China’s financial system and economy. Next to the tentative nature of Beijing’s earlier efforts, this latest effort looks downright forceful, but it is nonetheless inadequate to the task at hand.
This latest initiative has three basic parts. Beijing is urging the nation’s banks to boost their financing for property developers. Since most banks are state-owned, they will doubtless respond. This new urging is a complete reversal from the Chinese regime’s efforts in 2020-21, when the authorities set out to starve developers of financing. That starvation policy was itself a radical reversal from Beijing’s former and long-held policy of promoting property development. More than anything else, the 2020 decision is responsible for the crisis in the first place. Now, the Chinese Communist Party (CCP) has come full circle: promote with easy financing, starve developers of funding, and then promote it again. Economic management does not get any worse….