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Speaker 1: Let's get to a bloomberg scoop. Now, Beijing may allow

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Speaker 1: homeowners to temporarily hold mortgage payments on stalled property projects

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Speaker 1: without incurring penalties. Were told the plan is part of

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Speaker 1: a broader push to stabilize the Chinese property market. Joining

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Speaker 1: us to discuss this, John Leeu, Bloomberg's senior executive editor

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Speaker 1: for Greater China, joining us from Beijing. So, as the

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Speaker 1: Bloomberg piece points out, John, there is concerns here that

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Speaker 1: this could actually backfire. But I guess authorities are more

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Speaker 1: confident that this is going to help prop up and

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Speaker 1: stabilize this sector that is causing a lot of concerns

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Speaker 1: for the Chinese economy. I think the thing that authorities

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Speaker 1: are hoping this does is by time. The concern here

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Speaker 1: is that there are a lot of homebuyers that have

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Speaker 1: plucked down a lot of money, sometimes their entire life

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Speaker 1: savings on an apartment that has not been built, and

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Speaker 1: now because of that problems the developers not building those apartments,

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Speaker 1: and now frustrated those buyers are stopping their payments on

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Speaker 1: the mortgages. And the concern is more people will follow.

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Speaker 1: By giving this grace period, the hope is that uh

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Speaker 1: people will stop and calm down and it may help

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Speaker 1: the spread. At the same time, regulators have chimed in

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Speaker 1: over the weekend and ask commercial lenders here in China

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Speaker 1: to continue providing credit to those developers so that they

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Speaker 1: can finish those apartments. John Bloomberg Intelligence published a piece

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Speaker 1: and I guess they have crunched some numbers here indicating

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Speaker 1: that developers in China um could face. These are the

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Speaker 1: companies that Bloomberg covers. The property developers a total of

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Speaker 1: a hundred and seventy two billion dollars in construction costs

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Speaker 1: to deliver h pre sold but not yet booked. That

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Speaker 1: is an estimate, but it's a big number. Where would

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Speaker 1: this money come from? Might the PBOC have to step

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Speaker 1: in at some point if the market can't support this,

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Speaker 1: So that is the question is where is the money

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Speaker 1: going to come from? And there has been some talk

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Speaker 1: that maybe local governments might step in and help either

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Speaker 1: take over the projects or help help those developers with

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Speaker 1: the financing. We have day former Deputy Finance Minister speak

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Speaker 1: just this week saying basically underlying how serious the situation

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Speaker 1: this is and saying the government should be prioritizing getting

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Speaker 1: the situation straight now and suggesting that local governments ought

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Speaker 1: to be stepping in as well. Obviously, the banks are many,

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Speaker 1: of which the biggest are state owned, and so there

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Speaker 1: is some capacity there for the government to get involved

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Speaker 1: through that avenue. And so as of now, what we

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Speaker 1: understand is there are Chinese banks have a total of

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Speaker 1: about thirty eight trillion UN of mortgages on their books. Uh,

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Speaker 1: it's about two trillion NUN that is involved in these

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Speaker 1: mortgage boycotts at the moment, according guessments by folks such

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Speaker 1: as deutschemkan GF securities and so, not overwhelming in terms

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Speaker 1: of size, but the concern is obvious, as you say,

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Speaker 1: such a big part of so many people have mortgages,

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Speaker 1: such a big part of the economy, and then there's

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Speaker 1: this concern about systemic risk as well. But as one

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Speaker 1: of guests we're saying earlier, when you do have these concerns,

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Speaker 1: you know or expect that you will see a bigger

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Speaker 1: step up from authorities as well to support the overall economy.

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Speaker 1: So in terms of further measures, what do you think

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Speaker 1: we could see. So earlier this week we we did

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Speaker 1: see the Central Bank provide more liquidity through its oper

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Speaker 1: market operations. That was the first time that the Central

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Speaker 1: Bank has done that since June. It looked like they

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Speaker 1: did that just to provide confidence, if not anything else,

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Speaker 1: to prevent contagion if there were any from spreading to

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Speaker 1: other parts of the market. In addition to the great

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Speaker 1: period we've talked about, in addition to regulators call you

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Speaker 1: it makes to continue lending, I think you might see

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Speaker 1: a situation where there are a number of restrictions on

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Speaker 1: home buying across the country, uh, such as an example,

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Speaker 1: every family in Beijing killing by one apartment at the moment. UH,

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Speaker 1: we might see some of that rollback, and some of

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Speaker 1: the cities across China unlikely, and your cities like Beiji,

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Speaker 1: but it's smaller jurisdictions that's possible. And so there might

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Speaker 1: be an effort to prop up the market and sentiment

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Speaker 1: among homebuyers, to try to get people back into the market,

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Speaker 1: and that would help me great. John. So much of

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Speaker 1: the conversation when it comes to stimulus is focused on infrastructure,

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Speaker 1: and I'm wondering whether or not the government needs to

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Speaker 1: kind of put that in the back seat, so to speak,

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Speaker 1: and focus more squarely on what's happening with the property space.

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Speaker 1: Does this the risk um posed right now by these

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Speaker 1: boycotts and and the lack of liquidity that many property

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Speaker 1: developers are facing, does that necessarily put infrastructure spending on

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Speaker 1: the back burner. I think the difference right now is

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Speaker 1: the situation with the mortgage boycotts is a potential risk,

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Speaker 1: obviously a big potential risk, but still has yet to

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Speaker 1: spiral into something that I would call a crisis of

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Speaker 1: a new sort. On the other hand, you do have

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Speaker 1: the economy already slow. We saw obviously second to gd

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Speaker 1: becoming it just barely growth at zero point four percent.

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Speaker 1: We've we've got an employment, relatively unemployment, relatively higher rates,

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Speaker 1: especially among the young, which is close in the second quarter.

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Speaker 1: And so infrastructure is a good way to provide employment,

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Speaker 1: to provide jobs, and so that is a immediate concern

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Speaker 1: the government does have to take into account, and so

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Speaker 1: I think it's a balancing act. They have to both

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Speaker 1: deal with what is certain and pressing, which I think

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Speaker 1: infrastructure does, but also try and stave off any potential

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Speaker 1: future risk such as we're seeing with the mortgage boy

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Speaker 1: coups and so many other risks as well. We know

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Speaker 1: COVID geopolitical risks, including as well the fact that perhaps

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Speaker 1: consumers may stop spending even further. Just tell us what

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Speaker 1: you're hearing from analysts in terms of the outlook for

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Speaker 1: the remainder of the year for China, Well, the situation

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Speaker 1: with COVID is probably the most uncertain. We have subvariants.

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Speaker 1: The b A five sub variant has been detected in China,

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Speaker 1: so there's a threat that could spread. You're talking a

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Speaker 1: little earlier about the infections. The affection numbers today coming

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Speaker 1: out quite high, close to seven, and so many cities,

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Speaker 1: dozens of cities across China coming under some sort of

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Speaker 1: movement restrictions and that that's going to weigh on the economy.

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Speaker 1: The property market obviously with that, that's an issue as well,

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Speaker 1: but that's also been exacerbated by the comment lockdowns. People

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Speaker 1: aren't going to go out and buy apartments that they're

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Speaker 1: not able to go out. UH, And I think those

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Speaker 1: are probably I would say the media problems the government

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Speaker 1: needs to tend to. UH. They're trying to tend to

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Speaker 1: it with infrastructure, with packed cuts, with prompting, trying to

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Speaker 1: add some confidence among foreign business leaders as well. I

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Speaker 1: think us trying to attentions that at the moment seems

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Speaker 1: to be a little bit on the back burnmit. Alright, John,

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Speaker 1: always great reporting. Thank you so much. John Loui, Bloombergh's

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Speaker 1: senior executive editor for Greater China, speaking there about bloomberg

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Speaker 1: scoop that Beijing may allow homeowners to temporarily hold mortgage

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Speaker 1: payments on stalled property projects.