(Bloomberg) --China’s central bank broke its silence on the debt crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread.
Authorities and local governments are resolving the situation based on “market-oriented and rule-of-law principles,” People’s Bank of China official Zou Lan said at a news briefing on Friday. The central bank has asked lenders to keep credit to the real estate sector “stable and orderly,” said Zou, who is head of the financial market department.
Concerns are growing that the cash crunch at Evergrande is spilling over to other developers as President Xi Jinping maintains strict measures to cool the property market. Contagion fears intensified over the past two weeks after a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that its default was imminent.