BAILOUT NATION: China considers local government purchases of unsold homes.

China’s property sector has been in a deep slump for years, hit by a debt crisis among developers. Since 2022, waves of policy measures have failed to turn around the sector that represents around a fifth of the economy and remains a major drag on consumer spending and confidence.

Banks have been reluctant to heed Beijing’s repeated nudges to bolster credit to the embattled sector given the risks of more bad loans and continued weak sales. Home sales value of top 100 developers in April slid 45% from a year earlier, according to recent surveys published by CRIC, a major real estate information provider.

The Politburo of the Communist Party held a meeting on April 30, saying it would improve policies to clear mounting housing inventories.

Dozens of cities have offered subsidies to encourage residents to replace their old apartments with new ones, in order to sell their growing stock of new apartments and provide crucial cash-flow to ailing developers.

Local state-owned enterprises would be asked to help purchase unsold homes from distressed developers at steep discounts using loans provided by state banks, according to the report, adding that many of these homes would then be converted into affordable housing.

China’s state-owned enterprises (SOE) are already models of Communist inefficiency and overloaded with existing debt, so I’m not sure how this is going to work.