Mid- to Senior-Level Officials Directly Address Evergrande Issue: "No Risk of Spillover to Financial Sector"

Lee Kang, Governor of the People's Bank of China, "Top Priority for Evergrande Creditors is Homebuyers"
Vice Premier Liu He, "China's Real Estate Market is Controllable"

[Asia Economy Beijing=Special Correspondent Jo Young-shin] As concerns over the instability of the Chinese real estate market, including Evergrande Group, spread, senior Chinese economic officials have stepped in to directly manage the situation.

[Image source=Reuters Yonhap News]

According to Chinese media such as Xinhua News Agency on the 21st, Yi Gang, Governor of the People's Bank of China, attended a virtual meeting of the Group of Thirty (G30) held the previous day and stated that the handling of Evergrande would be conducted according to Chinese law, with the rights of apartment and housing buyers given top priority.

Governor Yi emphasized that although Evergrande's liquidity issues are causing controversy both domestically and internationally, the possibility of the Evergrande problem spreading to the financial sector is low. He defined Evergrande as a real estate development company (developer) and noted that one-third of Evergrande's total debt is financial sector debt, all of which is secured. He reiterated that the Evergrande issue will not translate into financial sector risk.

Governor Yi also clarified the ranking of creditors. He stated that buyers of apartments and other housing contracted by Evergrande have the highest priority, and that the rights and interests of other creditors and related parties will be protected according to the law.

Governor Yi also expressed confidence in the Chinese economy. He explained that although the Chinese economy has recently faced unexpected situations such as sporadic COVID-19 outbreaks, floods and other natural disasters, rising international raw material prices, and power shortages, the trend of stable economic recovery remains unchanged.

He projected that the producer price index (PPI), which surged 10.7% year-on-year last month due to rising international raw material prices, will see easing upward pressure by the end of the year. He also expressed optimism about stable employment conditions, including urban unemployment rates.

[Image source=Reuters Yonhap News]

Chinese Vice Premier Liu He also supported Governor Yi's remarks. In a written keynote speech at a financial forum held the previous day, Vice Premier Liu stated that the Chinese real estate market is generally controllable.

Vice Premier Liu further emphasized, "China is a very large economy with strong resilience," adding, "The resilience of the Chinese economy comes from the competitiveness of market entities, the soundness of the economic structure, the correct policies of reform and opening-up, the huge domestic market, and the continuous efforts of the people." He expressed confidence that based on this resilience, China can fully achieve its economic growth target for this year.

This content was produced with the assistance of AI translation services.