Chinese authorities have reportedly requested major banks to provide financial support to Vanker, a large real estate developer facing liquidity issues.
According to major foreign media on the 11th, Chinese authorities recently reviewed the debt and loan status of financial institutions and Vanker, and requested financial support. Private bondholders were asked to negotiate extensions on Vanker's debt maturities.
It is rare for the Chinese government to directly intervene to resolve management difficulties of real estate companies. The government's active support for Vanker is interpreted as due to the fact that the company is a de facto state-owned enterprise with partial ownership by the Chinese government. Shenzhen Metro, under the Shenzhen municipal state-owned assets supervision agency in Guangdong Province, holds 33.4% of Vanker's shares. According to the Zhongzi Research Institute, Vanker recorded sales of 244.7 billion yuan (approximately 43.7 trillion won) from January to August last year, ranking second in China's real estate development industry by sales.
Furthermore, Vanker is one of the few Chinese real estate companies rated by international credit rating agencies, which is also considered to have influenced government support. If Vanker's problems escalate, it could negatively affect the overall creditworthiness of the Chinese market. In China, real estate accounts for more than 20% of the gross domestic product (GDP) and represents 80% of Chinese citizens' wealth, highlighting the significant impact of real estate on the overall economy.
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