China is taking drastic measures to prevent its debt crisis from spiraling out of control

China ordered banks to boost credit to struggling property developers on Sunday in a bid to tackle the country’s growing debt crisis, The Wall Street Journal reported.

The China Banking and Insurance Regulatory Commission (CBIRC) has asked banks to provide additional funds to eligible property developers whose projects have stalled, The WSJ reported. Analysts have estimated China’s subprime mortgages at between $150 billion and $370 billion. (RELATED: Chinese authorities will soon attach electronic monitoring bracelets to COVID patients)

Evergrande, one of the country’s largest residential developers, defaulted on $305 billion in debt in December 2021, sparking a crisis of confidence in China’s property sector, Barron’s reported.

The CBIRC directive comes after protests – both online and in person – continued to spread across China last week, multiple sources reported. Experts, like Gordon G. Chang, author of “The impending collapse of Chinasay the protests are symptomatic of China’s looming debt crisis, estimating that the country’s total debt stands at 350% of GDP.(RELATED: US, Japanese warplanes conduct joint drills on China’s doorstep)

Homeowners protested online against mortgage payments for unfinished properties last week, according at Reuters. Online petitions – which government censors have reportedly deleted – have identified hundreds of properties owned by major property developers who have failed to repay their debt, such as Kaisa Group Holdings and Evergrande Group, The Wall Street Journal reported.

Uniformed and plainclothes police also attacked protesters on July 10 outside a Bank of China in Zhengzhou to protest the inability to withdraw funds, CNN reported. Chinese authorities say several people arrested on June 18 for embezzling bank funds caused widespread cash shortages, according to the South China Morning Post reported.

Uniformed and plainclothes security personnel run to approach demonstrators, outside a building of the People’s Bank of China, who are protesting the freezing of deposits by some rural banks, in Zhengzhou, Henan province, China July 10, 2022, in this Screenshot from video obtained by Reuters. (Reuters)

A Chinese embassy spokesperson told the DCNF that China is not facing an existential crisis.

“Overall, China’s financial risks are under control, and 99 percent of bank assets are within the safe limit,” Liu Pengyu told DCNF.

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John A. Bogar