Ministry of Housing and Urban-Rural Development: Support real estate companies with temporarily tight capital chains to solve short-term cash flow problems
At the 2023-2024 China Economic Annual Conference held today, Vice Minister of Housing and Urban-Rural Development Dong Jianguo said that he will continue to cooperate with financial management departments to support real estate companies with temporary capital chain constraints to solve short-term cash flow constraints and promote their return to normal operations. , and resolutely prevent the concentrated outbreak of debt default risks.
Dong Jianguo said that companies that violate laws and regulations that lead to insolvency and loss of operating capabilities must be liquidated in accordance with the principles of rule of law and marketization. This is also the result of survival of the fittest in the market. For some time, the society has referred to the debt defaults of some real estate companies as "thunder explosions" and "capital chain breaks". In fact, the terminology is inaccurate.
"Real estate companies generally have a structure of a group company plus a project company. The group company and the project company are both independent legal persons. If the group company defaults on its debt, it does not mean that the project company has stopped operating. The development and operation of the project will continue. If the debt defaults, It is equivalent to a thunderstorm or a break in the capital chain, which will lead to the misconception that the company has completely stopped." Dong Jianguo gave an example. A large real estate company defaulted on its debt in the first half of last year, but the company still achieved sales revenue of nearly 80 billion yuan from January to November this year. and completed debt restructuring.
He said that all parties should look at the problems arising in the real estate market rationally and jointly maintain the stable and healthy development of the real estate market.
Dong Jianguo said that it is necessary to accelerate the construction of a new model of real estate development and solve the problems of real estate development. In terms of institutional mechanisms, it is necessary to determine housing demand based on population changes, scientifically arrange land supply, allocate financial resources, and realize that housing is determined by people, land is determined by housing, and money is determined by housing, so as to prevent market ups and downs. Establish a full life cycle management mechanism for houses from development and construction to maintenance and use, and form a long-term mechanism for house safety.
"The focus is to speed up the implementation of planning and construction of affordable housing, the construction of public infrastructure for both leisure and emergency use, and the transformation of urban villages. At present, the relevant work has been fully launched. The focus of the reform is to expand new ways of allocated affordable housing, and ultimately to achieve the goal of the government Basic needs will be guaranteed, the market will meet the demand for improved housing at multiple levels, and a housing system that promotes both renting and purchasing will eventually be established,” Dong Jianguo said.
