China's three red lines for home developers

Home prices have surged sixfold over the past 15 years, making cities such as Shenzhen less affordable than London.
Home prices have surged sixfold over the past 15 years, making cities such as Shenzhen less affordable than London.PHOTO: AFP

The danger lurking in China's debt-laden real estate sector was never so clear as late last month, when word of a possible cash crunch at China Evergrande Group, the world's most indebted property developer, sent investors running for the exit.

With seven more of the 10 most-indebted developers also based in China, policymakers in Beijing have drafted what state-run media is calling "three red lines" - metrics on debt that developers will have to meet if they want to borrow more.

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A version of this article appeared in the print edition of The Sunday Times on October 18, 2020, with the headline 'China's three red lines for home developers'. Print Edition | Subscribe