Chinese financial regulators have asked some banks not to classify overdue loans to China Vanke as non-performing and to extend repayment deadlines for the state-backed developer, in one of Beijing’s strongest interventions yet to prevent a default that could further unsettle the country’s financial system.
People familiar with the matter told Reuters that regulators had issued informal “window guidance” to lenders, urging them to support Vanke and avoid actions that could intensify its cash squeeze. Some banks were also asked to defer collecting interest payments owed by the developer, although the sources did not specify the size of the waivers.
The guidance was directed mainly at larger banks, many of which are state-owned, according to the people who spoke on condition of anonymity because of the sensitivity of the discussions.
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The regulators have not set a fixed period for how long Vanke’s overdue loans can remain outside the non-performing category. One source said the treatment would depend on conditions in China’s property market and further discussions with Vanke.
The intervention underscores the extent to which authorities are trying to prevent Vanke from becoming another major casualty of China’s prolonged property downturn. Rather than allowing missed payments to immediately translate into formal loan defaults and potentially force banks to recognize losses, the guidance gives lenders room to extend maturities and delay some collections while Vanke works through its liquidity problems.
The approach is considered necessary especially after Evergrande’s liquidation.
The approach also highlights the importance authorities attach to Vanke’s links to the state. The developer has total assets of close to 1 trillion yuan ($149.31 billion) and is one of the few major distressed developers to have avoided an official default throughout the property crisis.
Vanke has received financing support from Shenzhen Metro, its state-owned major shareholder, and has extended some yuan bond payments to avoid defaults. Banks had also agreed earlier this year to defer interest payments owed by the developer.
Record Losses Expose Vanke’s Worsening Finances
The pressure on Vanke has intensified as weak property sales continue to erode its ability to generate cash. The developer reported a record 88.6 billion yuan loss for 2025, reflecting the severity of the downturn in its core business. Its financial position deteriorated further in the first half of this year, when net loss widened to 14.95 billion yuan.
Revenue fell 33% from a year earlier to 70.2 billion yuan during the first six months, adding pressure to a balance sheet already carrying substantial debt.
At the end of June, Vanke reported total debt of 351 billion yuan. Bank loans accounted for 72% of that amount, while bonds represented 7%. The remaining 21% consisted of other borrowings, including loans from Shenzhen Metro, according to Vanke’s interim report released in August.
Shenzhen Metro provided Vanke with a 22 billion yuan credit facility last year and extended additional loans this year, giving the developer another source of liquidity as commercial financing conditions remain difficult.
The latest regulatory guidance effectively gives banks an incentive to keep working with Vanke rather than aggressively pursuing repayment at a time when the developer’s ability to raise cash is constrained.
For the banks, however, postponing recognition of non-performing loans does not eliminate the underlying credit risk. It instead gives Vanke more time to stabilize its finances and potentially benefit from an improvement in property-market conditions.
The approach is considered necessary because the guidance leaves the duration of the loan treatment open. If property sales fail to recover and Vanke remains unable to meet its obligations, banks could eventually face the same losses they are currently being asked to defer recognizing.
Vanke Becomes A Test of Beijing’s Property Rescue Efforts
China’s property sector has been under pressure for more than five years after a government campaign to curb excessive borrowing by developers triggered a broader liquidity crisis.
The sector was once one of the country’s most important engines of economic growth, supporting construction, employment, household wealth and demand across a wide range of industries. But home prices continue to fall, property investment remains weak, and efforts to establish a sustained recovery have so far struggled to gain traction.
Beijing has recently sought to curb presales of unfinished homes in an effort to restore confidence among buyers. Those measures have yet to produce a meaningful turnaround in home prices, leaving developers dependent on increasingly extensive financial and policy support.
Vanke is at the center of the issue because it has remained closely tied to the state while avoiding the formal defaults that have defined much of the property crisis. A disorderly failure by the developer could therefore carry implications beyond its own creditors, particularly if it weakened confidence in other developers, banks or state-linked companies.
That helps explain why regulators are focusing on preventing a “risk event” at Vanke, according to one source.
The immediate objective is not necessarily to erase Vanke’s liabilities but to prevent its liquidity problems from turning into a destabilizing event. By asking banks to extend loans, delay interest collection and postpone non-performing classifications, authorities are effectively buying time for the developer and the wider property market.
The longer-term question is whether that time can translate into a genuine recovery.
Vanke’s worsening losses, declining revenue and 351 billion yuan debt burden show that the company’s problem is not simply a temporary mismatch between payments and cash flow. Its underlying business remains exposed to a property market where sales and investment have yet to recover.
Therefore, the regulatory intervention offers Vanke another financial lifeline, but it also illustrates the increasingly difficult balance Beijing faces: preventing a major developer from defaulting without allowing temporary relief to substitute indefinitely for a recovery in the property market.