China Vanke, one of the largest Chinese developers to survive a crackdown on the sector in 2020/21, has a shortfall of 50 billion yuan (US$6.8 billion). The proposal involves regulators allocating 20 billion yuan (US$2.7 billion) in special government bonds to buy unsold properties and vacant land, according to a report by Bloomberg News.

Last month, the government of Shenzhen, where Vanke is based, reshuffled the firm’s senior management to increase state oversight and manage any non-repayment risks amid concerns over its more than 30 billion yuan (US$4.1 billion) public bonds maturing this year.

On Monday, major shareholder, state-owned Shenzhen Metro, agreed to provide Vanke with a 2.8 billion yuan loan on better-than-market terms.

Earlier this month, a research briefing by said that it would “not be surprising� if Vanke received a liquidity injection or were taken over by its state-owned shareholder. It said such a move would be “an ultimate consequence, or perhaps a long-standing intention to reorganise the sector�.

China’s property sector downturn has been triggered by China’s ‘three red-line policy�, which aimed at lowering developers� leverage in late 2020. To stabilise the sector, policy efforts have expanded since 2024, relaxing home purchases in top-tier cities, reducing taxes on home transactions, renovations of shanty towns, and support for affordable housing. Oxford Economics said the focus of government policy appeared to be on destocking.

New residential projects have declined 28% year on year on average for the past three years. Oxford Economics said it expects the trend to continue, due to the fact that financing conditions for property developers have deteriorated, and the market position of key developers has changed. Developers have also reduced their rates of land acquisition, which could be a leading indicator of their outlook on future demand, it noted.