(Yicai) Feb. 2 -- China’s new financing whitelist, which recommends real estate projects deemed eligible to receive financing, does not discriminate against developers that are in financial difficulties and will greatly assist these developments to reach completion, insiders said.

Cash-strapped projects, but which are expected to have relatively balanced finance sheets, will not be excluded from consideration, along with those in good financial standing, according to a document issued by regulators at the start of the month, which kickstarted the whitelist scheme by asking local governments to put together a list of real estate projects still under development eligible for financing. 

The first whitelist was sent to around 50 lenders by local governments earlier this week, and included 107 projects in Nanning, southwestern Guangxi Zhuang Autonomous Region and 314 in Chongqing in the southwest of the country. The first loan to a project in Nanning has already been extended.

The whitelist scheme effectively severs the connection between projects with good financial prospects and developers’ credit risks, another industry insider said. The financing is only used on the individual development to enable it to reach completion and to ensure a smooth hand-over to the buyer.

Some of our Chongqing projects have been included in the whitelist, a source from a developer which has defaulted on its debt told Yicai.

So long as the developments meet the conditions laid out by authorities, there is a chance that they will make the list, the Chongqing regional manager of another large real estate firm said.  And even if the projects are not in the first whitelist they could be in the next. 

“Projects will not be excluded from the whitelist simply because the developer is in financial distress,” he added.

A developer based in eastern China which has defaulted before told Yicai that his company has submitted applications for all of its projects under development in eastern China that fit the description of the new regulations and believes that they all have a chance of being included in the whitelist.

Editor: Kim Taylor