Top Chinese property developers have reported nearly $3 billion in foreign exchange losses in the first half of this year, primarily due to their US dollar borrowings. The losses are a result of the weakening of the renminbi, adding to the struggles faced by developers in securing cash to service their mounting debts. These losses act as an indicator of the exchange rate risks associated with the foreign currency-denominated debts of distressed property developers. The depreciation of the renminbi has been attributed to increased liquidity and negative portfolio flows into China. However, the exact losses due to renminbi depreciation could be even higher than reported. Developers such as China Evergrande, Country Garden, and Sunac China have been particularly affected by these losses and are facing difficulties in obtaining financing. State-owned developers, on the other hand, have been able to find more domestic funding to stabilize their financial positions. Despite the challenges faced by the real estate sector, analysts believe that the central bank is unlikely to take on additional risk related to exchange rate fluctuations.
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