Translated by: MOS Translation Group – tang777

At a time when the liquidity crisis in Communist China’s real estate industry is sweeping public real estate companies, the local Chengtou Holding company has become the main force in purchasing land, trying to resolve the dilemma of local governments under the “land finance” model.

According to the report, in the last two months of last year, at least half of the land plots in nine of the 21 major cities where land supply was centralized were purchased by the local Chengtou Holding company. While this action will help hold back the current trend of declining land sales and ease the financial pressure on local governments amid the economic slowdown, it will undoubtedly push up the leverage ratio of Chengtou Holding company and further increase the already heavy debt burden.

Chengtou Holding company is an urban construction investment company that is a government investment and financing platform in major cities across the country and is the nature of public institutions or wholly state-owned companies.  This kind of company does not have the ability to make a profit themselves but operates through government subsidies and bank loans. Previously, a number of large and medium-sized banks tightened lending to the local Chengtou Holding company for land acquisition and real estate development projects, and increased risk control requirements, but now they are forced to implement government-mandated investment and financing business. According to a report, this year, Communist China’s Chengtou Holding company will face bond maturities of about US$376 billion in both domestic and overseas markets. It’s only a matter of time before it explodes.

(This article represents the views of the author only)


Proofread by: Lakers
Edited by: Lakers
Posted by: Lakers

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