China's securities regulator has unveiled a new policy document aimed at reshaping how the capital markets support the country's next phase of real estate development. The China Securities Regulatory Commission (CSRC) issued the "Opinions on Capital Market Support for Building a New Real Estate Development Model" to align financial services with the sector's transformation and enhance the quality of housing and corporate upgrades.
The move follows central government directives to accelerate the formation of a new real estate development model and promote high-quality growth. The policy is designed to foster a healthier relationship between finance and the property industry, ensuring the capital market system adapts to evolving industry demands.
Comprising four sections and 12 articles, the policy outlines key priorities. First, it emphasizes reforming how real estate development projects are financed, shifting from reliance on developer creditworthiness to evaluating individual project viability. This approach ensures equitable access to funding for development enterprises across all ownership structures, while tightening entry standards, information disclosure, and fund supervision to mitigate risks.
Second, the plan supports reasonable financing channels. It endorses refinancing by listed real estate developers and the use of tools such as share issuance, targeted convertible bonds, and cash to acquire property-related assets. It also encourages bond issuance for compliant projects, promotes commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS), and backs the use of eligible rental housing and urban renewal projects for real estate investment trusts (REITs) or as expansion assets. Progress on commercial property REITs will be steady, and qualified private fund managers may establish real estate private investment funds.
Third, the policy refines regulatory oversight. Listing reviews will spotlight project-based financing characteristics, while disclosure rules will focus on compliance with accounting standards. Strict and look-through supervision of raised funds will be enforced, alongside robust measures to crack down on fraudulent issuance, false disclosures, and misappropriation of capital, with heightened penalties for systemic and organized misconduct.
Finally, the document addresses risk prevention and resolution. Implementing a "four early" approach, it calls for mechanisms to anticipate capital market risks tied to real estate, bolstering coordinated supervision across equity, bond, and fund markets. For listed developers, delisting processes will be managed smoothly with diversified exit routes, while collaboration with local governments will aim to clear defaulted bonds and broaden risk disposal methods.
Going forward, the CSRC will prioritize implementation of these measures, balancing industry growth with regulatory compliance. By leveraging the capital markets' full capabilities, it seeks to facilitate financing for compliant projects, tighten oversight of property securities issuers, and mitigate systemic risks, ultimately contributing to the sector's high-quality evolution.