Research on Measures for China’s Real Estate Enterprises under the Background of ‘Three Red Lines’ Policy

Abstract

Since 1980, houses have been defined as commodities, and Chinese real estate has officially become an industry. On August 23, 2020, "a key real estate enterprise fund monitoring and financing management rules "which is also called "three red lines" have been formed. This article explains the constraints these rules exerted on the real estate firms by presenting the specific content of the "three red lines", illustrates the two main effects of the "three red lines" which are reducing the scale of financing and increasing the cost of financing for real estate firms, demonstrates and compares two firms' operational strategies and their current situation, and finally gives recommendations about financing strategies to firms belonging to different groups classified by the "three red lines" separately. The suggestions mainly focus on ways to improve liquidity and turnover rate. It is hoped to promote the stable and healthy development of the real estate industry under the background of the "three red lines" policy by delivering this article.