Just a little more on the Chinese government's rescue plan to support its decidedly wobbly property market, a move that has put the jets under the big Australian miners today.
The package to stabilise property sector was released on Friday and its central plank is a 4.3 trillion yuan ($A910 billion) fund to be made available to complete unfinished, presold projects.
There's 300 billion yuan ($A63 billion) for state-owned enterprises to buy unsold homes, 100 billion yuan ($A21 billion) in re-lending for rental housing, 500 billion yuan ($A105 billion) in supplementary lending to redevelop older buildings in urban areas, and the list goes on.
A trillion here, a trillion there, pretty soon you're talking serious money.
China’s Real Estate Newspaper – published by the housing ministry – called it an "historic moment" for the sector, and China's recently moribund CSI real estate index jumped almost 10 per cent on the news.
Investors in Australia's big miners followed suit today on the theory that trillions of fresh yuan being pumped into Chinese property will mean greater demand for Australian resources.
Rio Tinto rose 2.6% in the wake of the news, BHP (+2%) and Fortescue (+1.6%) were not far behind.
So, will it work?
Certainly, results won’t be known for some time, but it will give Chinese property developers a bit of confidence in the midst of a crisis that seen some of the biggest players such as Evergrande and County Garden go under, while even a major state-linked developer like Vanke is tottering at the moment.
ANZ’s senior China strategist Zhao Peng Xing believes while the package may win the immediate battle, the longer-term war is a different question as the fundamentals are unchanged.
"The impact of the rescue plan will be mixed," he said.
"Under the destocking plan, the government is virtually a single buyer acquiring the existing inventory and redistributing to potential buyers who are financially insufficient or unwilling to buy at the prevailing price.
"Our view is that the rescue plan will be sufficient to stabilise the market outlook on the supply side, but the demand-side measures are insufficient."
.