China expands access to loans for property developers, acting to end its prolonged debt crisis

BANGKOK (AP) — China has rolled out new rules meant to expand access to commercial bank loans for property developers as Beijing doubles down on its effort to end a prolonged crisis in the real estate industry.

The policies will allow real estate companies to use bank loans pledged against commercial properties such as offices and shopping malls to repay their other loans and bonds and to cover operating expenses. They were announced late Wednesday by the People’s Bank of China, the National Financial Regulatory Administration and the Finance Ministry.

Beijing has moved this week to stabilize ailing financial markets and boost the economy by freeing up more money for lending in various ways. That includes cutting required bank reserves.

The flurry of new measures and pronouncements from senior Communist Party officials about the need to stabilize financial markets and build confidence in the economy, the world’s second largest, appears to reflect a renewed determination to get growth back on track.

Dozens of developers have defaulted on their debts after the government cracked down on excessive borrowing in the industry several years ago. The largest, China Evergrande, is still trying to resolve more than $300 billion in debts and a Hong Kong court is due to hold a hearing on its restructuring plans next week.

The latest policies are not a full reversal of the effort to rein in debt and control risks in the property industry.

The new rules say the bank loans cannot be used to buy commercial housing or rental housing or to start new construction or buy land. Loans cannot exceed 70% of the appraised value of the property being used as collateral and should generally last a maximum of 10 years, with an absolute limit of 15