China aims to improve policy measures for 'whitelist' projects

Apart from easing purchasing restrictions, China can also adopt stronger policy measures to boost financing for the real estate industry to ensure the stable recovery of the sector, experts said.

In particular, they said the authorities should enhance the real estate financing coordination mechanisms so that the "whitelist" program can be more productive.

Under the "whitelist" program, local authorities are recommending real estate projects eligible for financial support to financial institutions. They are also coordinating with financial institutions to fulfill the requirements of these projects.

Their comments came as the country has recently seen a new round of policy easing in housing purchase restriction. While market watchers expect those measures to help tap demand potential and inject positive energy into the real estate market, many have called for more targeted measures to ease liquidity stress of developers.

Yao Yang, director of the China Center for Economic Research at Peking University, urged stronger financing support for developers, which he said is key to boosting market expectations and stabilizing the property market.

"The financing environment for developers is continuously improving as authorities from both the central to local have stepped up efforts on the issue. We have seen improvement for developers' financing from both development loans and bonds," said Gu Jianwei, senior analyst at corporate department of Golden Credit Rating International. "However, recently released policy measures need time to deliver more effects, and more measures are expected as developer liquidity stress remains an issue in the industry."

Gu suggested stronger efforts should be made to enhance the real estate financing coordination mechanisms among the developers, financial institutions and government, as well as to improve the "whitelist" approach, as commercial banks need to follow standard protocols for issuing loans and may get uneasy over funding projects with potential risks or default projects.

Data from the National Financial Regulatory Administration showed that, as of the end of Janurary,170 cities in 26 provincial-level regions have established real estate financing coordination mechanism, to recommend 3,218 "whitelist" projects for commercial banks to fund for. Among those projects, 84 percent are developed by private developers or those of mixed-ownership.

As of the end of March, commercial banks had reviewed all the first-batch "whitelist" projects, and agreed to fund more than 520 billion yuan for more than 2100 projects among them.

Gu said works should be done to accelerate banks' loan approval and issuance for projects on the "whitelist", while refining approval standards and loan conditions for the "whitelist" projects with incentive mechanisms for commercial banks, such as including their loans to those projects as positive factors in their performance evaluation.

Besides, policies on banks' development loans should also be appropriately adjusted to improve real estate projects' financing under the "whitelist" approach like, for instance, removing commercial banks' credit limits on developer groups, thereby reducing obstacles to bank lending, he said.