China Cuts Reserve Ratio, Pledges Housing Support After Latest Default

China on Monday announced a reserve ratio cut and renewed support for the housing market as another Chinese property developer said it had defaulted on a major bond repayment.

The central bank said it would cut the reserve requirement ratio by 0.5 percentage points for most banks, effective December 15.

The move reduces the amount of cash the banks must hold in reserve, which will allow 1.2 trillion yuan ($188 billion) to be injected into the economy over the long term, the central bank said in a statement.

The announcement came after another Chinese developer, Sunshine 100 China Holdings, said it missed a debt repayment deadline, adding to deep concerns over the property market that have been stoked by massive debt at Evergrande Group.

Sunshine 100 said it had missed a Sunday deadline to make $179 million in principal and interest payments on a 10.5 percent bond.

The Hong Kong-listed firm said in an exchange filing that the default was due to "liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry".

Repeat defaulter Sunshine 100 now has $385 million of outstanding dollar notes, according to data compiled by Bloomberg.

China's real estate industry -- a key growth driver in the world's second-largest economy -- has cooled in recent months after Beijing tightened home buying rules and launched a regulatory assault on speculation.

The moves have created headaches for several major developers, notably Evergrande, the country's second-largest by volume and which is weighed down by billions of dollars in debt.

The reserve requirement ratio cut is aimed at easing pressure on financial institutions and encouraging them to grant more loans on favourable terms to businesses.

China's top leaders on Monday also agreed to "promote the construction of affordable housing, support the commercial housing market and better meet the reasonable housing needs of buyers", state news agency Xinhua said.

Attendees at the meeting chaired by President Xi Jinping said the moves would "promote the healthy development and virtuous cycle of the real estate industry", according to Xinhua.

Evergrande -- which is drowning in $300 billion of debt -- has so far avoided default, but it had dollar bond coupons worth $82.5 million in total due Monday, when a 30-day grace period ends, according to Bloomberg.

On Friday, embattled founder Xu Jiayin was summoned by officials after the company released a statement warning it may not have enough money to "continue to perform its financial obligations".

The Guangdong provincial government later said it would send a working group to Evergrande to "supervise and promote enterprise risk management".

Evergrande's shares in Hong Kong closed down 19.6 percent on Monday, while Sunshine 100 ended the day down more than 14 percent.