{"id":1582330,"date":"2022-08-01T08:32:36","date_gmt":"2022-08-01T12:32:36","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1582330"},"modified":"2022-08-01T08:33:03","modified_gmt":"2022-08-01T12:33:03","slug":"china-collects-44-billion-to-save-real-estate-developers-500000-presale-house-buyers-stop-mortgage-payments","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-collects-44-billion-to-save-real-estate-developers-500000-presale-house-buyers-stop-mortgage-payments\/","title":{"rendered":"China Collects $44 Billion to Save Real Estate Developers, 500,000 Presale House Buyers Stop Mortgage Payments"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">32<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fchina-collects-44-billion-to-save-real-estate-developers-500000-presale-house-buyers-stop-mortgage-payments%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1582330&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>China plans to collect up to 300 billion yuan (about $44.4 billion) to support real estate developers struggling to finish their projects, while over half a million buyers stopped mortgage payments on their unfinished homes in July.<\/p>\n<p>The fund is collected by China\u2019s State Council, financial information platform REDD <a href=\"https:\/\/www.reutersconnect.com\/detail?id=tag:reuters.com,2022:newsml_KBN2P0050\">reported<\/a> on July 26.\u00a0The China Construction Bank has contributed 50 billion yuan (about $7.4 billion) and China\u2019s central bank\u2014the People\u2019s Bank of China (PBOC)\u2014made an effort of 30 billion yuan (about $4.44 billion). The report didn\u2019t indicate which organizations will pay the rest.<\/p>\n<p>However, the fund can\u2019t even fill the loop that the \u201crotten tail buildings,\u201d or the unfinished presale houses created.<\/p>\n<p>The Chinese regime allows real estate developers to presale apartments even when the buildings are only drawings. Buyers need to pay the whole price, which includes a down payment and mortgage after they sign the contract. The project becomes \u201crotten tail buildings\u201d when the developer has halted construction for 12 months.<\/p>\n<p>State-run Shanghai <a href=\"https:\/\/www.baogaoting.com\/info\/167157\">E-House Real Estate<\/a> Research Institute reported on July 18 that there are about 900-billion-yuan (about $133 billion) in mortgages tied to the \u201crotten tail buildings\u201d in China. Buyers started to refuse to pay mortgages in July.<\/p>\n<figure id=\"attachment_4626753\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/07\/27\/GettyImages-1236471509-1200x800.jpg\"><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4626753\" src=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/07\/27\/GettyImages-1236471509-600x400.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"400\" \/><\/noscript><\/figcaption><\/a> A residential and commercial complex under construction in Nanning, in southern China\u2019s Guangxi region on Nov. 9, 2021. (STR\/AFP via Getty Images)<\/figure>\n<p>By July 26, victims from 113 cities in 26 provinces listed 321 unfinished building projects on <a href=\"https:\/\/github.com\/WeNeedHome\/SummaryOfLoanSuspension\">GitHub<\/a>. \u00a0They uploaded photos and statements to verify the authenticity of the claims. E-House calculated that there are 1,701 apartments in one project on average, which means about 550,000 buyers can\u2019t move into the homes they purchased.<\/p>\n<p>E-House warned in its 2022 annual report that buyers of 3.85 percent of China\u2019s real estate projects might refuse to pay the mortgage because the presale homes they bought are \u201crotten tail buildings,\u201d even though it means they will have a lowered <a href=\"https:\/\/www.theepochtimes.com\/meet-your-american-social-credit-system_4002925.html\">social credit score<\/a>.<\/p>\n<p>The <a href=\"https:\/\/www.theepochtimes.com\/china-bars-millions-from-travel-for-social-credit-offenses_2811584.html\">social credit system<\/a> is a method the Chinese regime uses to control people. The regime doesn\u2019t allow a low score person to take public transportation or allow their children to go to public schools.<\/p>\n<h2>State Fund Won\u2019t Solve the Issue: Banker<\/h2>\n<p>On top of the $44.4 billion state fund, local regimes in eastern China\u2019s Jiangxi, central China\u2019s Hunan, southwestern China\u2019s Yunan, northwestern China\u2019s Shaanxi, and southern China\u2019s Fujian provinces also launched local funds to help real estate developers, state-run Jiemian News <a href=\"https:\/\/m.jiemian.com\/article\/7790774.html\">reported<\/a> on July 22.<\/p>\n<p>However, economists and bankers don\u2019t think these funds can solve the issue.<\/p>\n<p>\u201cUnless the Chinese regime likes to spend all its money on the real estate market,\u201d Cheng Xiaonong, a political and economics scholar who holds a Ph.D. in sociology from Princeton University, <a href=\"https:\/\/www.youtube.com\/watch?v=vWd5-3vAirc\">commented<\/a> on July 24. Cheng didn\u2019t think the regime would spend its national treasure.<\/p>\n<p>\u201cOne fund can\u2019t solve the issue,\u201d Zheng Yi, a former China investment banker, <a href=\"https:\/\/www.epochtimes.com\/b5\/22\/7\/21\/n13786500.htm\">told<\/a> The Epoch Times on July 21. \u201cThe rotten tail buildings issue is an accumulated problem. It needs new policies and a large amount of funds to solve.\u201d<\/p>\n<p>Zheng said that developers purchase lands from a local government, sell the apartments to individuals, bribe the government officials and banks to make the projects progress smoothly, put the money into their own pockets, and then pays for the construction.<\/p>\n<figure id=\"attachment_4626761\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/07\/27\/GettyImages-1236003382-1200x800.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-4626761\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-1236003382-600x400-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"400\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4626761\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-1236003382-600x400-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"400\" \/><\/noscript><\/figcaption><\/a> Residential buildings under construction in Yichang, Hubei Province, on Oct. 20, 2021. (STR\/AFP via Getty Images)<\/figure>\n<p>The developers borrow from banks. At the same time, the buyers get mortgages from banks. With the loans and the sales income, the developers should have enough money to finish a project. However, they can\u2019t finish the project if they don\u2019t calculate and control the costs well. On the other hand, the banks that provide loans and mortgages are facing big risks when the project remains unfinished.<\/p>\n<p>To solve the issue, the government has to use taxpayers\u2019 money.<\/p>\n<p>\u201cThe government can only support a few developers that it wants to help,\u201d Zheng said. \u201cIt doesn\u2019t have the capacity to help all.\u201d<\/p>\n<p>Zheng believes there will be chain reactions. New buyers will only purchase from developers who received the government funds. The other developers will go bankrupt faster, which means they can\u2019t pay back their loans or finish all the projects. Then the banks have nothing to foreclose on and can\u2019t collect the loans and mortgages. The banks face the risk of bankruptcy and can\u2019t issue any more loans to the surviving developers.<\/p>\n<p>\u201cIt\u2019s hard to solve the issue,\u201d Zheng said. \u201cI think the worst problem in China\u2019s real estate industry is that the consumers and investors don\u2019t have confidence in the market.\u201d<\/p>\n<h2>Market Confidence<\/h2>\n<p>China\u2019s property market has lacked buyers since the pandemic began. At the same time, more and more people try to sell their homes. To revitalize the market, the Chinese regime launched policies to either encourage or force people to purchase a home.<\/p>\n<p>Since June, at least <a href=\"https:\/\/www.theepochtimes.com\/chinese-cities-push-collective-buying-of-homes-amid-shrinking-government-income_4617638.html\">nine Chinese cities<\/a> have been reportedly encouraging residents, including government employees, to \u201cgroup buy\u201d designated properties in an effort to boost local property sales.<\/p>\n<p>On June 13, the Huangdao district regime in Qingdao city, publicly <a href=\"https:\/\/www.epochtimes.com\/gb\/22\/6\/29\/n13770086.htm\">announced<\/a> that any resident who had enough savings in the bank should buy a new home, officials must talk to any residents who don\u2019t want to buy, and staff members of each community in the district will be fined if residents in the community buy less than two new homes in June.<\/p>\n<figure id=\"attachment_4550484\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/06\/1.tagreuters.com2022binary_LYNXMPEI5K0CM-FILEDIMAGE.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-4550484\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/1.tagreuters.com2022binary_LYNXMPEI5K0CM-FILEDIMAGE-600x659-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"659\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4550484\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/1.tagreuters.com2022binary_LYNXMPEI5K0CM-FILEDIMAGE-600x659-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"659\" \/><\/noscript><\/figcaption><\/a> An advertisement from Central China Real Estate offering to let buyers use garlic crops to make a down payment on a property in June 2022. (Reuters\/Screenshot via Reuters)<\/figure>\n<p>Several city governments, including Zhongshan city,\u00a0issued a <a href=\"https:\/\/www.epochtimes.com\/gb\/22\/7\/5\/n13774050.htm\">limiting order<\/a>\u00a0stipulating \u201cthat the interval between each adjustment of the sales price of a new residential building shall not be less than 3 months, and the decline shall not exceed 5 percent.\u201d<\/p>\n<p>The struggling developers are using many ways to promote their products.<\/p>\n<p>In central China\u2019s Henan province, developers <a href=\"https:\/\/www.theepochtimes.com\/desperate-chinese-property-developer-willing-to-swap-wheat-for-house_4550483.html\">offered<\/a> to take wheat and garlic crops as down payments.<\/p>\n<p>One Central China Real Estate advertisement says buyers can use the crop, priced at 26.7 cents per pound to offset as much as $23,900 of a down payment in one of its developments.<\/p>\n<p>In eastern China\u2019s Jiangsu Province, developers <a href=\"https:\/\/www.theepochtimes.com\/epochtimes.com\/b5\/22\/6\/30\/n13770456.htm\">offered<\/a> to take peaches and watermelons as down payments.<\/p>\n<p>However, these policies and promotions had limited success.<\/p>\n<p>The China National Statistics Bureau released\u00a0a report on July 15 that said the total home sales decreased 26.2 percent in the first half of the year, compared with 2021, and the total home sales in value decreased 31.8 percent.<\/p>\n<p>That same day, the bureau also <a href=\"http:\/\/www.stats.gov.cn\/tjsj\/zxfb\/202207\/t20220715_1886403.html\">released<\/a>\u00a0statistics on the home price index of 70 cities in June showing that prices in 34 cities have dropped to a level lower than June 2020. Six of them dropped to the level in June 2017.<\/p>\n<figure id=\"attachment_4625325\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/07\/27\/GettyImages-165161546-1200x707.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-4625325\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-165161546-600x353-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"353\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4625325\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-165161546-600x353-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"353\" \/><\/noscript><\/figcaption><\/a> A Chinese worker walks past a new property development in Beijing on April 1, 2013. (Mark Ralston\/AFP via Getty Images)<\/figure>\n<h2>Buyers\u2019 Sadness<\/h2>\n<p>The issue of so many unfinished buildings is too big to hide. The regime hasn\u2019t banned related posts on social media. Even the state-run media reported the victim buyers\u2019 sadness.<\/p>\n<p>\u201cI borrowed 500,000 yuan (about $74,000) from my relatives for the down payment, and pay over 6,000 yuan (about $890) for the mortgage every month,\u201d 30-year-old Wuhan resident Li Mingyu (pseudonym) <a href=\"https:\/\/www.epochtimes.com\/gb\/22\/7\/13\/n13780043.htm\">told<\/a> The Epoch Times on July 13. According to the contract, the developer promised Li it would be ready by the end of 2021 but completely stopped construction last September.<\/p>\n<p>Li said her salary isn\u2019t large, and she felt her life would be totally ruined if she kept on paying the mortgage for an unfinished home.<\/p>\n<p>Yang Yue (pseudonym) and her husband migrated to Zhengzhou several years ago to operate a furniture business. They don\u2019t have local registered addresses which the regime uses to control where people move. To send her son to a school in the city, they have to own a home.<\/p>\n<p>\u201cWe bought the presale apartment in 2020. The developer would give us the keys in 2023,\u201d Yang <a href=\"https:\/\/www.epochtimes.com\/b5\/22\/7\/23\/n13787794.htm\">told<\/a> The Epoch Times on July 23.<\/p>\n<p>Yang and her fellow home buyers found that the developer stopped construction of the building last year, and didn\u2019t give them any information about when they will resume the project. At the same time, it becomes harder and harder to sell furniture. \u201cPeople became poorer, and the economy is in bad shape.\u201d<\/p>\n<p>Facing the bills for her store\u2019s rent, current home rent, living costs, and education for her son, Yang said she regretted buying the presale home.<\/p>\n<figure id=\"attachment_2138270\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2016\/08\/14\/GettyImages-459372716.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-2138270\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-459372716-600x407-1.jpg\" alt=\"An elderly Chinese farmer stands outside her home on farmland backdropped by a new housing development in Hebei on Nov. 21, 2014. (Kevin Frayer\/Getty Images)\" width=\"600\" height=\"407\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-2138270\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/08\/GettyImages-459372716-600x407-1.jpg\" alt=\"An elderly Chinese farmer stands outside her home on farmland backdropped by a new housing development in Hebei on Nov. 21, 2014. (Kevin Frayer\/Getty Images)\" width=\"600\" height=\"407\" \/><\/noscript><\/figcaption><\/a> An elderly Chinese farmer stands outside her home on farmland backdropped by a new housing development in Hebei on Nov. 21, 2014. (Kevin Frayer\/Getty Images)<\/figure>\n<p>State-run Huashang Newspaper <a href=\"http:\/\/news.hsw.cn\/system\/2022\/0322\/1443098.shtml\">reported<\/a> in March that over 300 buyers in Xi\u2019an didn\u2019t have enough money to rent a finished home, and moved into the unfinished presale apartments they bought in 2013 or 2014. The unfinished residential buildings have no electricity, water, heating, or bathroom. And the walls and floors are just raw cement.<\/p>\n<p><em>Yi Ru<\/em> <em>contributed to this report.<\/em><\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-nicole-hao\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/07\/15f5846635a68b74_ttl7dayOyw_WEB_NicoleHao_4.jpg\" alt=\"Nicole Hao\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.\n<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>China plans to collect up to 300 billion yuan (about $44.4 billion) to support real estate developers struggling to finish their projects, while over half a million buyers stopped mortgage<\/p>\n","protected":false},"author":1,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1582330","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1582330","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1582330"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1582330\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1582330"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1582330"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1582330"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}