China Unveils Property Rescue Package Amid $124B Debt Crisis, Markets Rise Ahead of Third Plenum

May 20, 2024, 06:03 AM

China's property market is grappling with significant challenges as developers, including state-backed Vanke, face defaults on $124 billion of dollar debt and unsold housing inventory reaches an eight-year high. In response, Beijing has announced a comprehensive rescue package aimed at stabilizing the crisis-hit sector ahead of the third plenum. The measures include relaxing mortgage rules, longer-term bond issuance, and removal of restrictions. Despite these efforts, analysts remain skeptical, arguing that the package is still too small to end the crisis. The economic contribution of real estate could drop to 16% from one-quarter, reflecting the severity of the situation and economic pain visible in empty high rises across the country. Foreign buyers have shown interest, purchasing $1.9 billion of A-shares via Hong Kong links, but most Chinese developers' shares have fallen. Asian markets have reacted positively, touching a two-year high as traders cheered the property plan.