PBOC Rate Cut Not Helping Struggling Developers

Property developers, among China’s most heavily leveraged companies, will get a negligible lift from the country’s first benchmark interest rate cut in two years as sales slip and banks pull back on lending to the sector.

After a long bull run, China’s property market, which makes up about 15 percent of its economy and is the main driver of demand in some 40 industries from cement to steel, has grappled with soft prices and mounting inventories for at least six months.

That prompted China’s central bank to cut its benchmark lending rates by 40 basis points to 5.6 percent on Nov. 21, reversing in part its drive to cool a sector that many feared had become so bloated by speculative froth that it was crowding out other forms of investment.


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