Is China cutting the financial lifeline for its massive city revival schemes?
China Development Bank says it will keep up its funding for shanty town redevelopment but there are signs the heyday may be over
A massive urban rehabilitation programme affecting millions of families and driving property investment in cities across China is expected to lose steam amid signs that Beijing is turning off the taps of a major funding source.
Hong Kong-listed Chinese property stocks fell this week on speculation that China Development Bank (CDB) would stop channelling cheap funding to local governments for “shanty town redevelopment”.
Over the last decade, local authorities have relied on the low-interest funding to realise a central government plan to upgrade living standards for poorer urban residents.
In a brief statement on Tuesday, CDB said it was still helping local governments with financing for the projects and it was doing this in an “orderly” manner.
But Li Yimin, an analyst with Shenwan Hongyuan Securities in Shanghai, wrote in a note that the statement signalled that CDB would be much more discreet and cautious in lending for the schemes.