In recent years, Beijing has issued three or five orders to curb speculation in the real estate market. According to the latest situation, private real estate developers have withdrawn from the market due to financing difficulties, but state-owned enterprises have taken advantage of the situation and entered the country, circling the land and making the prices of many big cities still run at high levels.
Recently, the CII released a ranking of the top 100 domestic real estate enterprises in terms of land acquisition area and land acquisition amount in the first three months of 2021, showing that among the top 10 enterprises in terms of land acquisition amount, only two real estate enterprises, Sunac and Binjiang, are purely private real estate enterprises; and among the top 10 real estate enterprises in terms of land acquisition area, four of them, Wanda, Sunac, Beyoncé and New Town Holdings, account for less than half of the total, and all of them are state-owned real estate enterprises with strong land acquisition ability.
Zhang Yang, a real estate market insider in Shanghai, said in an interview with this station this Friday (May 7) that the government believes that the debt ratio of private enterprise assets is too high, so it strictly reviews loan applications from private enterprises and restricts private real estate developers from buying land:.
“All real estate companies are required to keep their debt ratios within a certain range, so now private companies are busy trying to find ways to reduce their debt ratios. I know a few CFOs of private real estate companies, and they are being guarded very tightly (by the government). If he can’t get a loan (from the bank), then he can’t afford to buy land.”
State-owned enterprises have rich assets financing conditions better than private enterprises
WeChat public number “expand the old dog” said in an article, not long ago, Chongqing, Guangzhou auction land, but also state-owned enterprises to grab land accounted for the bulk of. Land reserves will be a factor that directly determines the development potential of real estate enterprises.
According to the article, although the top 10 list of domestic real estate enterprises sales list is still dominated by private real estate enterprises, but according to the scale of land acquisition, the pattern of the future list will certainly have a radical change. Under the new financing and control policies, the core advantage of central enterprises is the strength of capital, reflected in the ability to finance and financing costs on the strengths of other types of real estate enterprises no one can match.
Zhang Yang said state-owned enterprises are protected by the government, banks also opened the door to state-owned enterprise developers loans.
“State-owned enterprises are ‘pro-son’, private enterprises no one to help you. Private enterprises want your debt ratio to meet the target as the first goal, state-owned enterprises do not see the requirement to meet the debt ratio. Didn’t Xi Jinping say he wanted to make SOEs bigger and stronger, now the main thing is to make SOEs bigger and stronger.”
Chinese real estate companies – Top 100 land acquisition amount and area, January-March 2021.(Web screenshot)
Statistics on the top 100 Chinese real estate companies regarding land acquisition amount and area in the first three months of this year show that the top ranking company is state-controlled enterprise Greenland China, with land acquisition amounting to RMB 32.8 billion, followed by state-owned enterprise Poly Development with RMB 26.9 billion, the third ranking company is Xiamen Municipal Government’s C&D Property with land purchase amounting to RMB 23.9 billion, and the fourth is Shekou China Merchants, with land purchase amounting to over RMB 20 billion as well.
Private enterprises have a gloomy outlook for capitalists seeking to cash out abroad
In the case of China’s macroeconomic policy to government-owned enterprises, the current private enterprises, especially real estate companies are indeed difficult to compete with state-owned enterprises.
The article “expand the old dog” writes that the financing costs of large central enterprises, generally lower than the average private real estate enterprises to achieve 2-3 points, or even more. Even some of the newly established project companies of central enterprises, in the agency rating inside can do more than A, the parent company of the top 50 private enterprises many are not up to A. The huge gap behind this is the powerful national assets behind the central enterprises as a credit backing.
Zhang Yang said that the current private enterprise owners feel the difficulties of operation, some people transfer their assets abroad, but a considerable number of people are stopped within the country, unable to leave the country:.
“So some of the big private real estate owners everyone is at risk, I see are not fleeing out, most of them are still in the country, so they are quite nervous, will not just go to grab land.
Beijing claims to support private enterprises but says one thing but does another
After the 18th National Congress of the Communist Party of China, the authorities have repeatedly stressed the need to upgrade the status of the private economy: “to ensure that all types of economies have equal access to production factors, fair participation in market competition, and equal protection under the law.”
But the truth is not what the official documents say. Liu Wentao, a Hubei-based Internet writer, told the station that all CCP documents or regulations are simply unbearable in the face of power:.
“If this current situation is not reversed in these two years, and if there is a crackdown on the private sector and private enterprises, the impact on the development of the Chinese economy will be very far-reaching. The next ten years will be very bad, you see, something is going to happen in these two years”.
Given the current political situation, many private companies in China have had to work with state-owned enterprises to seek continued survival. Public opinion is that by choosing to cooperate with state-owned enterprises for survival, the size of private enterprises will only continue to shrink and eventually fall into the hands of state-owned enterprises.
Recent Comments