Octus on Credit: China continues to put floor under Hong Kong property crisis

Katherine Shi, China Editor

This week, Octus exclusively reported that China’s central government has taken the rare step of intervening to guide the country’s Big Four banks to increase financial support for Hong Kong’s flagship developer, New World Development. 

Government officials have held meetings with the Big Four—Agricultural Bank of China, Bank of China, Bank of Communications, and Industrial and Commercial Bank of China—asking them to not only maintain existing credit lines but also consider extending new financing for the embattled developer.

This intervention in a Hong Kong developer underscores China’s increased willingness to step in and put a floor under a property crisis that has persisted for nearly four years, contributing to the malaise in Hong Kong’s real estate sector.

This follows a similar high-profile rescue plan in January for Mainland China’s blue-chip developer, China Vanke Co., where the company’s major shareholder, state-owned Shenzhen Metro, stepped in—backed by the Shenzhen State-owned Assets Supervision & Administration Commission—to provide liquidity support, including ensuring the company had funding to meet debt repayments in the first quarter of 2025.

Beyond the pragmatic need to prevent top-tier real estate developers from collapsing—which could further weaken consumer demand, reduce bank support for the sector, erode critical government revenue sources, and destabilize other developers—the interventions align with the Chinese government’s broader development goals and policy directions for 2025.

Stabilization is a recurring theme within these goals.

While headlines have largely focused on China’s push for a high-tech economy—particularly in the wake of DeepSeek—the government’s own work reports also emphasize the importance of ensuring stability in real estate and stock markets. This reflects an acknowledgment that without consumer confidence, the goal of driving increased consumption to sustain economic growth is unlikely to succeed.

The property market remained a cornerstone of the Chinese economy until the recent downturn and was the favored investment sector for the nation’s aspiring middle classes. Restoring faith and consumer confidence in Mainland and Hong Kong property markets is crucial to achieving the broader goal of economic stabilization.

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