Potential homebuyers look at a property model in Huai'an, Jiangsu province.Photo:Xinhua

China's regulators will tighten loan issuance and move to cut bad debts in the real estate industry for the second half of the year. 

On Thursday, People's Bank of China (PBoC), China's central bank, and the Ministry of Housing and Urban-Rural Development held a conference in Beijing with China's major developers. The discussion was aimed at establishing "long-term real estate financing regulations", according to a statement published by PBoC. 

Although the specifics of the conference have not been disclosed, it was the second high-level conference held in a month on curbing the real estate "bubble" and stabilizing the housing market. 

Industry experts say the regulators may give property developers unofficial "window guidance" instead of introducing formal monetary policies, but loans flowing to the property sector will be tightened in the second half of the year. 

"The regulators are now looking closely at the financing of the property sector, but the core is for the better development of the industry, not simply to crack down on the developers," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute told the Global Times Sunday.

"Stabilizing land prices will be another job focus, to ensure that the developers have easier access to land," Yan said. 

Some of the biggest developers in China are known for their tight liquidity and high debt levels, with high turnover essential for their survival. In 2019, over 30 real estate companies in China had a debt-asset ratio of 80 percent, according to a report by bjnews.com.cn, and four companies' ratios were above 90 percent.

In July, developers in China issued 64.2 billion yuan ($9.28 billion) of corporate bonds, according to statistics from China Index Academy. The figure represents an increase of 29.1 percent on the same period last year, up 86.1 percent from last month.

Global Times