An exterior view of the China Evergrande Center in Hong Kong, China, March 26, 2018.
Bobby Yip | Reuters
BEIJING – The People’s Bank of China said on Friday that indebted developer China Evergrande was its own case and most real estate companies in the country were flat.
Real estate giant Evergrande has $ 300 billion in liabilities and missed another payment to investors in U.S. dollar-denominated debt on October 11. Economists have noted that Evergrande’s vast holdings of land and physical property set it apart from the financial assets of the US investment bank.
The risks posed by Evergrande are “controllable,” Zou Lan, director of the financial markets department of the People’s Bank of China, said on Friday in Mandarin at a press conference, according to a CNBC translation.
âChina Evergrande Group’s problems in the real estate sector are an individual phenomenon,â he said, noting that real estate prices have remained stable. “Most real estate businesses are operating stably and have good financial metrics, and the real estate industry as a whole is healthy.”
Real estate and related industries account for around a quarter of China’s GDP, according to Moody’s estimates. The central bank and other authorities held a rare meeting with Evergrande executives in late August and called on the company to resolve its debt problems.
Days later, the developer warned investors of a potential default. In the weeks that followed, it became known that Evergrande was selling part of his business to raise funds.
Zou added on Friday that authorities would protect individual consumers when purchasing their homes and provide financial support for the resumption of construction.
Many new apartments in China are sold to consumers before they are completed. This means that Evergrande’s financial woes and unfinished projects have left many buyers with their savings or significant mortgages, and no details on when – or if – their apartments will be completed.
The central bank did not indicate on Friday that major monetary policy changes were coming. The head of the department, Sun Guofeng, told reporters that the PBoC will continue to implement normal monetary policy. He added that factors like inflation were controllable.