Michael Pettis: China to tighten rules on real estate developer funding

Michael Pettis: China to tighten rules on real estate developer funding
China tightens real estate developer rules

Michael Pettis, economist, professor of finance, nonresident senior fellow, author, macroeconomic analyst at Peking University; Carnegie Endowment for International Peace, highlights that Beijing is imposing tighter controls on property-sector leverage.

According to information cited from Caixin, China will now require real estate developers to complete the main structures of residential buildings before selling them off-plan. This move aims to strengthen oversight of a funding model that has previously contributed to leverage problems within the property sector.

Pettis previously reported that China's property market saw a significant year-on-year decline in cumulative sales in July. He also noted that China's 10-year bond yield reached its lowest level in more than a year as investors reacted to weak economic growth. These developments highlight ongoing pressures in the country’s real estate and financial sectors.

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