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China plans to relax “three red lines” to encourage state-led property M&A

by Mike Robinson

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© Reuters. FILE PHOTO – Apartments under construction are photographed from an apartment building at sunset in Shekou, Guangdong Province, China, November 7, 2021. REUTERS/David Kirton

HONG KONG, (Reuters) – Chinese policymakers will exclude the debt acquired from distressed assets in calculating the compliance of property developers with the “three lines”, according to REDD financial intelligence provider. This comes amid unprecedented sector stress.

This policy, known as the “three redlines”, limits how much property developers can borrow annually by limiting their debt ratios.

Guangdong and Shanghai were joined by their local governments to meet with state-owned developers in the country last week. This was after mid-December, when policymakers requested that 11 developers have liquidity problems to help ease financial stress.

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