BEIJING: Chinese authorities have unveiled sweeping measures to rescue the country’s struggling property sector, as regulators seek to offset years of harsh pandemic curbs and a real estate crackdown that have stalled the world’s number-two economy.

The banking regulator and central bank on Friday issued a 16-point set of internal directives to promote the “stable and healthy development” of the industry, which were reported by Chinese state media on Monday.

The measures include credit support for debt-laden housing developers, financial support to ensure the completion and handover of projects to homeowners, and assistance for deferred-payment loans for homebuyers.

That came on the same day the National Health Commission issued 20 rules for “optimizing” China’s zero-Covid policy, where certain restrictions were relaxed to limit its social and economic impact.

“We view this as the most crucial pivot since Beijing significantly tightened financing of the property sector,” Ting Lu, chief China economist at Nomura, said in a note.

“We believe these measures demonstrate that Beijing is willing to reverse most of its financial tightening measures.”

Hong Kong stocks surged more than three percent Monday after the measures were unveiled, extending Friday’s more than seven percent rally before paring gains to 1.7 percent at the close.

The Hong Kong-listed shares of China’s biggest developer by sales, Country Garden, closed up 45 percent while the shares of major competitor Greenland gained more than 35 percent.

‘Not a bailout’

Beijing imposed widespread lending curbs on property developers in 2020, which exacerbated their liquidity issues and caused several of the largest to default on bond payments.

The knock-on effects on the massive real estate sector were severe, with cash-strapped developer Evergrande — China’s largest — and others failing to complete projects, sparking mortgage boycotts and protests from homebuyers.

The measures emphasized “guaranteeing the handover of buildings”, and ordered development banks to provide “special loans” for the purpose, according to a copy circulating online.

The document ordered financial institutions to treat state-owned and private real estate enterprises equally, as well as “actively cooperating with distressed real estate enterprises in risk management.”

The measures also included “extending the transition period arrangements… of real estate loans” for distressed developers, and support for “high-quality real estate enterprises to issue bond financing.”

“The plan includes financial stability measures that aim to prevent massive defaults and hence provide a ‘soft landing’,” ANZ analysts wrote in a note.

But analysts cautioned that these changes — alongside the limited loosening of zero-Covid measures — would not cause an immediate recovery for the ailing sector.

“While not many are expecting a financial crisis caused by the current property downturn, the mainstream view is that the property sector would stay weaker for longer. Therefore, the worst is far from over for developers,” Macquarie economist Larry Hu said in a note.

“The package is not a bailout of property developers,” wrote Andrew Batson, an analyst at Gavekal Dragonomics.

“With the new policies, the government is trying harder to make its current approach to Covid containment and the property market work, rather than shifting to a different approach.”

New home prices have been falling for more than a year, while demand is struggling to pick up owing to ongoing strict pandemic controls that have dampened consumer confidence.