The Chinese authorities are urging Evergrande to step up the sale of assets and the resumption of projectsZou Lan, head of financial markets at the People’s Bank of China (PBOC), also said at a briefing.
Evergrande had diversified and greatly expanded its business, Zou added.
Last month, as the Evergande debt crisis escalated, the People’s Bank of China said it would safeguard the legitimate rights and interests of home buyers.
In August, the central bank and banking regulator said they had summoned Evergrande executives and asked them to properly manage their debt risks, and Zou’s comments on Friday constitute the central bank’s first public statement on the real estate group. since then.
The appetite of financial institutions for real estate firms has declined significantly in response to the risks of some construction companies, which has caused a significant drop in loans to real estate companies, he explained.
“The risk exposure of individual financial institutions to Evergrande is not great and the contagion effect for the financial sector is controllable,” he said.
Evergrande should accelerate the sale of assets and the resumption of construction of the projects, and authorities will provide financial support for the resumption of activity, he said.
Some lenders have had “misunderstandings” about the central bank’s debt control policies, causing financial strains for some companies as some new projects are unable to get credit even after companies have paid off existing loans, he said. Zou.
“This extreme short-term reaction is a normal market phenomenon,” he explained.
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