China Construction Bank Corp, one of the country’s four largest state-owned lenders, will set up a 30-billion-yuan ($4.2 billion) fund to buy properties from developers. The move comes even as policymakers take steps to contain a real estate crisis that is weighing on the economy, according to a Bloomberg report.
The bank in a statement said that through the fund, which lasts for 10 years, it will “invest in existing assets” of real estate companies and renovate the properties into rental housing. Realty companies in China have been facing a credit crunch after the government earlier tightened lending to the sector in order to reduce debt risks.
China Construction Bank Corp had 181 billion yuan in outstanding loans related to rental housing by the end of June, 35 per cent more than at the end of December. A home-leasing platform it operates has covered 96 per cent of areas at the city level and above in China, according to the Bloomberg report attributing it to this year’s first-half report.
According to a Reuters’ report, China’s ‘zero-COVID’ policy – including stringent lockdowns, travel restrictions and mass testing – has taken a heavy toll on the country’s economy. The government’s crackdown on big technology companies has also had an outsized effect on the young workforce.
It added that retail sales in China rose just 2.7 per cent year-on-year in July, recovering to 5.4 per cent in August but still well below the mostly 7 per cent-plus levels during 2019, before the pandemic.
Unemployment among people aged 16 to 24 stands at almost 19 per cent, after hitting a record 20 per cent in July, according to government data. Some young people have been forced to take pay cuts, for example in the retail and e-commerce sectors, according to two industry surveys. The average salary in 38 major Chinese cities fell 1% in the first three months of this year.
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