The China Banking and Insurance Regulatory Commission (CBIRC) has recently announced nine major tasks or initiatives on which it aims to focus its attention in 2023. The first and foremost of these is the restoration of real estate sector financing.

During its recent 2023 working conference, the CBIRC revealed its work plan for the year. This year’s plan continues the basic theme of “seeking progress while maintaining stability” and covers key areas like macroeconomics, real estate, small and medium-sized banks, and corporate governance.

The nine tasks are:

• Improving the country’s overall economic operations
• Restoring real estate sector financing
• Reforming small and medium-sized bank risk management
• Improving insurance company risk management
• Transforming trusts and non-bank institutions
• Adopting measures concentrating on promoting a credit risk rebound
• Constructing a better governance system for financial institutions
• Improving overall supervision efficiency
• Continuing the opening-up of the economy.

This year’s nine tasks are more detailed and market-oriented than last year’s seven, which were more conservative and general.

The CBIRC commonly lists the tasks in their order of priority, with the second usually being the most important as the first is always a general one along the lines of improving economic growth. Therefore, restoring real estate sector financing is the crucial task for the CBIRC in 2023.

And, although some policy support initiatives were rolled out late last year, the real estate market is still struggling.

The government’s halting of centralized land auctions in major cities has led to sharp declines in land transactions, China International Capital Corporation (CICC) data show, with only a few, small-volume transactions done in tier-2 and tier-3 cities recently.

On the other hand, recent demand in the real estate sector remains elevated in tier-1 cities, but declined from highs in tier-2 cities where the momentum is relatively soft, following a surge in sales. 

But the financing environment has shown signs of recovery since last December. The net credit bond financing amount for real estate firms, according to the CICC, reached a 32-month high in December.

And, as for real estate firm funding, the year-on-year declines narrowed for domestic loans, foreign investment and individual mortgage loans. The year-on-year fall in real estate development investment also narrowed from -19.9% in November to -12.2% in December.

In the first half of January, the financing environment has improved further, with short-term liquidity conditions easing, especially for property developers with a healthy balance sheet.