BEIJING — China on Nov 14 released a circular to support qualified property developers' "appropriate use" of pre-sale funds.

Commercial banks will grant property developers letters of guarantee, which allow them to withdraw money from their pre-sale accounts, according to the circular jointly issued by the China Banking and Insurance Regulatory Commission, the Ministry of Housing and Urban-Rural Development, and the People's Bank of China.

After being assessed, developers that meet standards regarding credit risks, financial conditions and reputation, will be eligible to receive the letters of guarantee, it said.

A developer will be allowed to withdraw as much as 30 percent of the pre-sale funds saved for a property project.

The circular added that the withdrawn funds should be used for project construction and repayment of debt as priorities, and must not be used to purchase land, make new investments or repay money borrowed from shareholders.

At an important meeting in late July 2022, Chinese leadership urged upholding the principle that "housing is for living in, not for speculation," stressed the need to make full and good use of the policy toolkit by adopting city-specific policies, and underlined the importance of supporting people's essential housing needs, as well as their needs for better housing.