Author: Chen Shaomin

Summary: How we respond to the impending wave of real estate industry bankruptcies is crucial for preventing the outbreak of financial risks, safeguarding national security, facilitating the transformation of our country’s economic development, and protecting the property interests of ordinary citizens. This article summarizes the key problems plaguing the real estate sector: banks are facing massive loan defaults from real estate developers that remain unpaid; it is increasingly difficult for these developers to free up their mortgaged completed properties and ongoing construction projects; homebuyers have suffered substantial losses; real estate developers—either through their own companies or through shell corporations they control—have been obtaining loans from banks or issuing bonds, thereby creating enormous debt leverage and escalating debt risks; and many real estate developers, via multiple closely controlled affiliated companies, have been engaging in financial commingling, personnel overlap, and confusion of corporate personalities to evade tax payments, transfer assets, and siphon off funds. After analyzing the three root causes behind these issues, this article proposes three countermeasures: fully recognizing the importance and urgency of resolving real estate problems and focusing on preventing these issues from triggering a financial crisis; scientifically regulating real estate industry bankruptcies and strengthening institutional frameworks to ensure the healthy development of the real estate sector; and reinforcing organizational leadership to effectively and steadily resolve real estate problems. In particular, this article puts forward... The guiding principle for addressing current real estate challenges is to take as our fundamental principle the avoidance of triggering financial risks, and to aim for a healthy restructuring of the real estate industry. We should scientifically regulate the scale, methods, and pace of bankruptcies among real estate development enterprises, with bankruptcy reorganization serving as the primary approach. The focus should be on revitalizing high-quality assets and pursuing strategic investments and mergers and acquisitions. We need to extend the reasonable duration of bankruptcy proceedings, using time to create space, thereby achieving a soft landing for the real estate industry. And specific operational measures were proposed.

Keywords: Real estate issues; financial risks; debt leverage; homebuyers; confusion of legal personality; scientific regulation of bankruptcy; bankruptcy reorganization; differentiation and restructuring; institutional development.

Since the lifting of pandemic restrictions this year, China’s real estate sector has not experienced a new wave of retaliatory growth. On the contrary, as a pillar industry, the real estate sector has shown a clear downward trend. Housing prices have fallen, property transaction volumes have shrunk, and leading real estate developers have been among the first to run into financial distress, with their funding chains breaking down. As a result, a large number of small- and medium-sized real estate developers have entered bankruptcy proceedings. In response to this situation, it is an urgent priority to identify the problems exposed during the bankruptcy of real estate developers, study countermeasures to address these issues, and thereby tackle the impending wave of developer bankruptcies, break through the current economic development difficulties facing China, safeguard national security, and achieve high-quality development.

   I. Issues Existing in the Bankruptcy of Real Estate Development Enterprises in Our Province

The author has been fortunate enough to participate in the work of bankruptcy administrators for several real estate development enterprises in our province and has conducted surveys and gained insights into some struggling real estate developers. By analyzing real estate development enterprises that have already gone bankrupt or are on the verge of bankruptcy, it is not difficult to identify the following common issues shared by these companies.

(1) A large number of loans extended by banks to real estate developers have become overdue and remain unpaid, making it difficult for these developers to release the mortgaged completed properties and ongoing construction projects that were pledged to the banks. The real estate industry is capital-intensive, requiring high initial investment, rapid turnover, and high leverage in its operations. Ensuring the smooth circulation of a company’s cash flow is thus the primary task for real estate developers. The vast majority of real estate development companies lack the financial resources to fund their projects entirely through their own capital and rely heavily on market-based financing to secure the necessary funds—among which bank loans are the main source of financing. To obtain bank loans, real estate developers often mortgage most of their ongoing construction projects and completed properties to banks. When the real estate market is booming and property prices rise, developers can quickly sell their completed or under-construction properties through pre-sales or other sales channels, generating rapid cash inflows that enable them to repay their bank loans on time and keep their investment and output in a healthy, virtuous cycle. As a result, real estate developers reap substantial profits, and governments collect sizable land-transfer fees. However, when the real estate market slumps and property prices decline, developers’ sales plummet, cash collections shrink dramatically, and their cash flows become severely strained—or even completely disrupted. Consequently, they struggle to repay their bank loans when they come due, leading to a surge in non-performing loans and bad debts. This situation leaves many properties mortgaged to banks unreleased and unliquidated.

(2) The homebuyer has suffered enormous losses. On the one hand, the breakdown of the funding chain has led to a large number of unfinished construction projects, leaving homebuyers unable to achieve their intended purpose of paying the down payment. On the other hand, even if real estate developers have already completed many properties and even handed them over to buyers, these properties remain mortgaged to banks, preventing buyers from obtaining property ownership certificates. To raise construction funds, real estate developers, in addition to seeking loans from banks by all means possible, often entice homebuyers to invest substantial sums under the guise of pre-sales or investments. Many real estate developers, much like Evergrande Group, obtain funds from homebuyers, accounting for roughly one-third of their total liabilities. When the property market slumps and numerous unfinished projects emerge, homebuyers, realizing that they have little hope of ever taking possession of their homes, promptly stop making mortgage payments on their installment loans secured by the properties they’ve purchased. As a result, financial risks for banks soar. Meanwhile, homebuyers spontaneously organize themselves into groups and lodge complaints with governments at various levels, posing a significant risk to social stability. Even when some developers deliver completed properties to buyers as stipulated in their contracts, because most of these properties are already mortgaged to banks, the property registration authorities refuse to issue ownership certificates for properties encumbered by mortgages, pushing these buyers into the ranks of those protesting and seeking redress. Once a real estate developer goes bankrupt, the properties purchased by homebuyers who have already paid their full purchase price—since they lack valid property ownership certificates—will not be recognized as having true property rights. Such properties will then be classified as ordinary claims held by the developer’s creditors, placing these homebuyers at grave risk of losing their homes and being compensated only according to the liquidation ratio.

(3) Real estate development enterprises obtain loans from banks or issue bonds through their own companies or affiliated shell corporations they control, thereby creating substantial debt leverage and debt risks. In order to obtain substantial loans from banks, real estate development companies have been striving to secure bank loans in their own corporate names. After the state introduced “credit restriction” policies targeting real estate developers, these companies generally resorted to setting up shell corporations—companies they could control—that served as the primary borrowers, while their own firms acted merely as guarantors. The borrowed funds were then effectively “lent back” to the companies themselves for use in their real estate development projects. Whether borrowing in the company’s own name or through these controlled shell corporations, the companies invariably used their already completed properties and ongoing construction projects as collateral to provide guarantees to the banks. Even the company’s owners and de facto controllers found themselves compelled, at the banks’ request, to provide joint and several personal guarantees in their own names. Yet despite these layers of collateralization, the companies continued to sell their completed or under-construction properties to homebuyers, resulting in a situation where the same property was sold twice—creating what is known as the “one property, two sales” phenomenon. As the housing market began to cool, this practice led to a “lose-lose” scenario: banks were unable to recover their loans, and homebuyers faced extreme difficulties in obtaining ownership of the properties they had already paid for—whether completed or under construction. Even when some properties had already been delivered to buyers, although these buyers held legitimate expectancy rights under valid house purchase contracts, the properties themselves remained subject to the banks’ mortgage liens, giving the banks priority in repayment. Once the company was declared bankrupt by the court, the conflict between these competing claims reached a boiling point, thereby posing a significant risk to social stability. In addition, real estate developers have also issued large volumes of corporate bonds through financial institutions; many leading companies even issued bonds overseas, creating enormous debt leverage and escalating debt risks. It was only after numerous real estate developers entered bankruptcy that it became apparent just how extremely high their asset-to-liability ratios had become—often leaving ordinary creditors with zero recovery rates.

(4) Many real estate development companies, through multiple affiliated entities under their control, employ practices such as financial commingling, personnel commingling, and confusion of corporate personalities to evade tax payments, transfer assets, and siphon off funds. In the course of their business operations, real estate development companies not only offer high salaries to the company’s actual controllers and certain senior management personnel, and distribute substantial dividends to shareholders, but also engage in practices such as keeping books off the books, falsifying accounting records, and mismatching financial vouchers with actual assets—methods that enable them to transfer assets on a massive scale and siphon off funds. Moreover, these companies even enter into construction contracts with construction firms they themselves control, effectively “making something out of nothing.” They generously transfer huge loans obtained from banks under the guise of paying for construction projects—essentially transferring funds from one hand to the other. As for the so-called construction contractors—the construction firms controlled by these companies—once they receive enormous sums of money for construction projects, it remains completely unclear how these funds are actually used, what specific projects they finance, how much each project costs, or how the final project settlements are handled. Some large real estate developers have even resorted to acquiring controlling stakes in small- and medium-sized banks through equity transfers, then obtaining unlimited loans from these banks for purported real estate development and other purposes. Once such companies enter bankruptcy proceedings, they are already severely insolvent, making it virtually impossible to repay the massive loans they’ve taken from banks, or else they will suffer enormous losses. Even more alarming is that when bankruptcy administrators hire auditing and appraisal firms to conduct an audit and assessment of the company’s assets and liabilities, they discover that the company’s financial management is utterly chaotic: the company doesn’t maintain any electronic accounting records at all, relying solely on manual bookkeeping. Furthermore, its original vouchers are often mislabeled or improperly matched, rendering the bankruptcy process unviable. As a result, the bankruptcy administrators are forced to meticulously verify and re-record every major financial account from previous periods.

II. The main reasons why real estate development enterprises in our province have encountered the above-mentioned issues

(1) The worsening macroeconomic environment, coupled with the adjustment cycle in the real estate industry, has pushed the development of the real estate sector into a bottleneck phase. In 2023, after three years of the pandemic, China’s economy did not experience the rapid recovery that had been anticipated. Instead, it found itself mired in a difficult and sluggish situation, with mounting downward pressure on economic performance. Manufacturing and the real estate sector continued to decline, and foreign trade saw negative growth. The contraction in demand, supply shocks, and weakening expectations became increasingly pronounced. The “three major engines”—investment, consumption, and exports—that had previously driven economic growth have almost entirely stalled. Long-accumulated risks in local government debt, real estate, and the financial sector have now fully erupted, presenting the economy with unprecedented difficulties and challenges. Under these circumstances, China’s international macroeconomic environment has only worsened. Led by the United States, Western countries—viewing China as their primary competitor—have disregarded the impact of the pandemic-induced weakening of demand and are attempting to take advantage of the situation to bring China down. After continuously waging trade wars, technology wars, and pursuing “decoupling and supply chain disruption” against China, the U.S., despite plunging its own economy into recession, has relentlessly raised interest rates on the U.S. dollar 11 times in a row, pushing them up to 5.5%, in a desperate bid to reap global profits. In particular, the U.S. is recklessly trying to lure capital back home, draining liquidity from China in the hope of ultimately reaping huge gains from the Chinese economy.

In China’s real estate sector, which finds itself in this year’s harsh macroeconomic environment, “misfortune never comes alone.” After more than two decades of rapid growth, the supply-demand relationship in the real estate market has undergone a fundamental and profound shift—from a situation of severe housing shortages to one of near equilibrium between supply and demand; in some regions, supply has even exceeded demand. According to statistics from the “China Population Census Yearbook—2020,” the per capita residential area in China has reached 41.76 square meters, with urban residents enjoying an average living space of 36.52 square meters.① The major shift in the supply-demand relationship has led to a dramatic reversal: housing prices, once soaring at record highs, have now hit a ceiling and can no longer rise further. In most cities—including first-tier cities—housing prices are declining, and real estate transaction volumes have dropped significantly. “According to data from institutions, second-hand home prices in the country’s top 100 cities have fallen for 18 consecutive months, showing a widespread downward trend.” This October, overall property market transaction volumes declined both year-on-year and month-on-month. Compared with the same period last year, total transaction volumes fell by 18.9 percentage points, and compared with September, they dropped by 5.7 percentage points.② This significant shift in the supply-demand relationship is causing the investment and financial characteristics that have accumulated over more than two decades of development in China’s real estate sector to gradually fade away. Aside from a small segment of housing demand driven by genuine needs, there is much less interest in investing or speculating in real estate, and the property market has entered a “winter” phase.

Under the dual impact of a deteriorating macroeconomic environment and the real estate industry entering a period of adjustment, the real estate sector is objectively facing tremendous downward pressure. As a result, industry leaders such as Evergrande Group and Country Garden have successively “exploded,” while numerous small- and medium-sized real estate developers are increasingly struggling, experiencing broken capital chains, a surge in unfinished construction projects, and many companies now joining the ranks of those going bankrupt.

(2) Many real estate developers take safeguarding their personal and family interests as their primary objective, regard “retiring unscathed” as their main task, and routinely employ illegal means to conceal assets and evade regulatory oversight.

These are the subjective reasons behind the aforementioned problems. During the boom and upward phase of the real estate industry, numerous real estate developers found it easy to sell their properties—once they had completed the two key tasks of “raising funds” and “acquiring land,” they could proceed according to procedure to build and develop the real estate projects approved in their plans. After these projects hit the market, thanks to the seller’s market dynamics, they quickly sold out. As housing prices continued to rise, most developers reaped enormous profits. While reaping hefty profits, these developers also steadily enhanced their political prestige, earning titles such as People’s Congress deputies, members of the Chinese People’s Political Consultative Conference, outstanding private entrepreneurs, and charity ambassadors. Given the close link between the real estate industry and the huge land-transfer revenues generated by the government, these developers’ influence within government circles has been steadily growing. However, a “crisis” in the real estate sector has now exposed the true nature of the vast majority of real estate developers: far from being solely focused on making their companies bigger and stronger, many of them have long harbored ulterior motives and kept escape routes ready. When the property market was booming and corporate performance was strong, they were already preparing for their own eventual retreat and exit. Leading real estate developers like Evergrande and Country Garden have even relocated their registered offices to the Cayman Islands—a tiny territory of just 259 square meters.③ This move clearly demonstrates that from the very beginning, these companies had no genuine intention of complying with national tax laws and were always prepared to flee at a moment’s notice. Moreover, Evergrande’s leader, Xu Jiayin, filed for bankruptcy protection in the United States, underwent a “technical divorce” from his wife, and set up an overseas “trust fund” for his son—all wildly illegal actions that drained massive wealth from banks, homebuyers, and creditors across the entire real estate value chain. In the end, however, he left behind a staggering 2.4 trillion yuan in debt domestically, holding the people, the government, and the banks hostage. It is undeniable that the Evergrande incident serves as a quintessential example of the negative behavior exhibited by many real estate developers.

(3) Irresponsible behavior and inadequate supervision by relevant government departments have allowed real estate developers to act arbitrarily and recklessly. In recent years, governments at all levels have intensified reforms aimed at streamlining administration and delegating power, combining deregulation with regulation, and optimizing services, placing great emphasis on improving the business environment and achieving remarkable results. However, there is a clear tendency in the regulation of private enterprises to substitute deregulation for effective oversight—a phenomenon characterized by inaction. The “rampant growth of capital” in real estate development companies is a striking manifestation of inadequate government supervision. The lack of responsibility and ineffective regulation by relevant government departments are precisely the managerial causes behind the aforementioned problems in the real estate industry.

1. China’s Constitution The stipulation that “the state encourages, supports, and guides the development of the non-public sector of the economy, and exercises lawful supervision and management over it” has not been fully implemented. It is not difficult to perceive that public discourse tends to overemphasize “encouragement and support” for non-public enterprises, while calls for “guidance,” “supervision,” and “management” of these enterprises remain relatively muted. Indeed, whenever government authorities take action to punish illegal behavior by individual private enterprises—including leading real estate developers—public opinion often turns to accuse the government of “cracking down on” the non-public sector.

2. The government adopts a multi-headed management approach toward real estate development enterprises, yet in reality, there is a lack of a clear primary entity responsible for oversight and regulation. The government has implemented a wide array of regulatory measures targeting the business activities of real estate developers—some oversee urban construction, planning, and development; others handle land-use approvals; still others regulate the conduct of market participants; some focus on corporate taxation; and yet others are responsible for financial controls within enterprises. However, to this day, it remains unclear who exactly bears the primary responsibility for the comprehensive management of real estate development activities—and even when responsibilities are formally defined, they often fail to be effectively implemented. This is especially true for the vast majority of real estate developers, which are privately owned. As a result, whenever problems arise, no one takes full responsibility.

3. The “close yet clean” relationship between the government and real estate developers has not been put into practice. On the one hand, the real estate industry is a major source of government fiscal revenue; land transfer fees account for roughly 40% to 50% of fiscal revenues in various cities, and in some cases even higher. Consequently, governments place considerable importance on local real estate developers and maintain frequent communication and engagement with them. On the other hand, real estate development companies engage in public relations efforts aimed at government leaders and relevant departments, hoping that these officials will show leniency—or even actively assist—in matters such as land acquisition, tax exemptions, and handling of violations. This practice has become an unspoken yet widely adopted marketing strategy. As a result, transactions involving power and money occur frequently, making the real estate development sector a hotbed for corruption.

III. Legal Safeguards for Resolving Issues in the Real Estate Industry in Our Province

Crisis is the precursor to problem-solving. The current adjustments in the real estate industry—especially the issues exposed by the bankruptcies of real estate enterprises—have provided us with the necessary foundation for addressing these problems in a targeted manner. As long as we attach great importance to this, concentrate our efforts, and adopt a scientific approach, we will surely turn crisis into opportunity and usher in a new, healthy development cycle for the real estate industry.

(1) Fully recognize the importance and urgency of resolving real estate issues, and focus on preventing real estate problems from triggering a financial crisis. Resolving the real estate issue is not merely a matter of fostering healthy development within the real estate sector itself; it is also closely tied to the broader transformation of China’s economic development model. Over the past two decades and more of real estate development, the sector has gradually become one of China’s pillar industries. It has not only spurred prosperity in nearly 60 related industries and provided employment for tens of millions of people, but has also generated substantial fiscal revenue for local governments, giving rise to an extensive, quantity-driven economic growth model. While the real estate sector has undeniably fueled economic prosperity, its negative side effects have become increasingly evident. Due to the persistent imbalance between supply and demand in the real estate market and the scarcity of land resources, high housing prices have become a source of widespread distress across the country. Despite repeated efforts by governments at all levels to curb soaring property prices through various policies, it has proven exceedingly difficult to stem their relentless rise. As a result of these high housing prices, the real estate sector has come to epitomize investment, speculation, and financialization—bank loans and most of the public’s wealth are now concentrated in real estate assets. Consequently, the real estate sector poses significant risks to the overall economy. Recognizing this grave potential danger, the Party Central Committee has put forward the principle of “housing is for living, not for speculation” as the guiding principle for real estate development. In a sense, today’s downward trend in housing prices is an inevitable outcome of the seven-year implementation of the “housing is for living, not for speculation” policy. Addressing the pressing issues currently facing the real estate sector with great determination presents an excellent opportunity to put into practice the new development philosophy and forge a new model of high-quality development.

Even more pressing is the need to resolve the current real estate crisis as a means of preventing a financial meltdown. China’s financial sector has become deeply entangled with the real estate industry; as evidenced by companies like “Evergrande” and “Country Garden,” both are saddled with hundreds of billions of yuan in bank loans. Shenyang Shengjing Bank, which has ties to “Evergrande,” was compelled to transfer its non-performing loan claims—amounting to 183.7 billion yuan—to the Liaoning Provincial Asset Management Company (Liaoning Asset) for 176 billion yuan④, in order to improve its balance sheet and avert a chain reaction of “explosions” similar to that seen at Evergrande. Therefore, resolving the current real estate crisis is a major strategic task for safeguarding national security.

    (2) Scientifically regulate real estate industry bankruptcies and strengthen institutional development to promote the healthy growth of the real estate sector. Given that the Federal Reserve has twice postponed raising U.S. interest rates since September of this year, most parties widely predict that the U.S. will likely halt its rate hikes next year. Meanwhile, China’s real estate sector, driven by significant shifts in supply and demand, is poised for a period of differentiation and restructuring. Therefore, both internal and external factors indicate that next year China is bound to see a surge in bankruptcies among real estate developers. In response, we should take the initiative, adopt scientific regulatory measures, and focus on preventing the outbreak of financial risks.

1. The guiding principle for addressing the current real estate challenges should be, first and foremost, to avoid triggering financial risks; second, to achieve a healthy restructuring of the real estate industry. We should scientifically regulate the scale, methods, and pace of bankruptcies among real estate development enterprises, with bankruptcy reorganization serving as the primary approach. The focus should be on revitalizing high-quality assets and pursuing strategic investment and mergers & acquisitions. Moreover, we should extend the reasonable duration of bankruptcy proceedings—using time to create space—and thereby ensure a soft landing for the real estate industry.

2. Conduct a comprehensive assessment of the bad debts generated by real estate development enterprises and their shareholding in financial institutions such as banks. To assess the extent to which financial institutions such as banks can absorb bad debts, we should gradually release real estate sector bankruptcies in line with the financial industry’s capacity to absorb losses. Under no circumstances should we allow real estate developers to go bankrupt en masse and without any restraint. In particular, we must prevent the bankruptcy of leading real estate companies from triggering a cascade of systemic repercussions. On this basis, we must carefully prepare contingency plans and implement real estate company bankruptcies in phased, step-by-step procedures.

3. The differentiation and restructuring of the real estate industry should primarily rely on bankruptcy reorganization, unless a small number of severely insolvent real estate developers are compelled to enter bankruptcy liquidation. Guided by the principles of bringing dead assets back to life and achieving rebirth through phoenix-like renewal, we will revitalize high-quality assets held by real estate development enterprises, step up mergers and reorganizations among these enterprises, establish equity-investment restructuring institutions for state-owned real estate developers, and implement strategic bankruptcy reorganization. Once a draft bankruptcy reorganization plan is approved by a vote at the creditors’ meeting or sanctioned by a court ruling, the enterprise will be allowed to continue its production and operations, permitted to borrow certain funds that will be classified as common benefit debts—including policy-backed loans aimed at ensuring timely delivery of housing projects—and granted the flexibility to extend the implementation period of the reorganization plan appropriately, using time to buy space. At the same time, supervision over the execution of the reorganization plan will be strengthened to ensure its successful implementation. Every effort will be made to minimize liquidation and auction sales of real estate developers’ assets, thereby preventing homebuyers and creditors from losing both their money and their homes. We should draw on the example set in 1999, when, in response to the impact of the Asian financial crisis, the state established the China Huarong Asset Management Corporation, the China Great Wall Asset Management Corporation, the China Orient Asset Management Corporation, and the China Cinda Asset Management Corporation—each tasked with acquiring, managing, and disposing of non-performing assets from four major state-owned banks, including the Industrial and Commercial Bank of China and the Construction Bank of China. Similarly, we should establish a national asset management company dedicated to handling non-performing assets of real estate developers, inject necessary capital into it, and create favorable conditions for investment and mergers through market-oriented approaches.

4. Adapt to major changes in the real estate market and establish a long-term mechanism for the healthy development of the real estate sector. Diligently implement the resolutions of the Central Political Bureau meeting regarding... The requirement to “adapt to the new situation characterized by significant changes in China’s real estate supply and demand, and promptly adjust and optimize real estate policies” The policies previously implemented to curb rising housing prices—such as restrictions on loans, purchases, prices, and sales—will be gradually phased out. We will earnestly implement the guidelines from the Central Financial Work Conference regarding... “Improve the regulatory system for real estate enterprises and their capital, and refine macroprudential management of real estate finance.” The key requirement is to establish a comprehensive legal and policy framework aimed at fostering the healthy development of the real estate industry, centered on maintaining a “dual-track system” that ensures both affordable housing and commercial housing. This will help realize the original intention of the real estate sector—“housing is for living, not for speculation”—and usher in a mature phase of sound and sustainable development for the real estate industry. The housing and urban-rural development planning management department should be clearly designated as the comprehensive management authority for the real estate industry. This government department is responsible not only for the management of real estate planning, construction, and demolition but also for financial supervision of enterprises and the prevention of financial risks. At the same time, it coordinates and collaborates with other government regulatory agencies to create synergies in “guidance,” “management,” and “supervision.” We will absolutely not allow the recurrence of situations in which pre-sale funds managed under dedicated accounts are arbitrarily withdrawn by real estate companies. The pre-sale system should be decisively abolished. Given the significant changes in the supply-demand dynamics of the real estate market, the pre-sale system for real estate has reached the point where it should be phased out of the historical stage. Now that this round of unfinished construction projects has been completely cleared, we should decisively halt the implementation of the pre-sale policy. The minimum proportion of self-owned funds that real estate development enterprises must allocate for real estate development should be clearly defined. Real estate development shall not rely entirely on market-oriented financing, and bank loans for real estate development shall not exceed 30% of the total investment. Banks that extend loans to real estate enterprises must explicitly stipulate in advance that the mortgaged properties may not be transferred to homebuyers. Moreover, banks must strengthen their supervision over the enterprise’s collateral and cash flows. Should any violation of bank loan agreements be detected, timely remedial measures must be taken to ensure the safety of bank loans. We should improve the institutional framework to “treat all real estate enterprises of different ownership structures equally and meet their reasonable financing needs.” Eliminate discrimination based on ownership and, while ensuring the safety of financing, promote the healthy development of the real estate industry.

(3) Strengthen organizational leadership and effectively and steadily resolve real estate issues. First, Strengthening the Party’s leadership is the fundamental guarantee for effectively addressing real estate issues. We should integrate the resolution of real estate problems into the national security work systems of Party committees at all levels and treat it as a key priority. Second is Since enterprise bankruptcy work is an important component of the market exit mechanism, the central government has clearly assigned the responsibility for this task to the Development and Reform Commissions at all levels of government. Accordingly, the Development and Reform Commissions at each level should take the lead in establishing joint meetings on enterprise bankruptcy, with participation from relevant agencies. The leading officials in charge of Party committees and governments at the local level should serve as the chief conveners. Under this mechanism, the bankruptcy of real estate development enterprises will be treated as a key priority, with overall planning, specific supervision, coordination, and implementation efforts being carried out to ensure that, through the bankruptcy of these enterprises, the real estate industry will usher in a new era of differentiation and restructuring.

(*Author: Chen Shaomin, Senior Consultant at Liaoning Tongfang Law Firm and Attorney at the Haikou Branch. Phone: 18940004050.)