(Reuters) – Chinese authorities have asked Ping An Insurance Group to take a controlling stake in embattled Country Garden, the nation’s biggest private property developer, four people familiar with the plan told Reuters.

Ping An has said it categorically denies the story.

Following are reactions to the article.

XU TIANCHEN, SENIOR ECONOMIST, ECONOMIST INTELLIGENCE UNIT:

“If this is true, it will have a very significant positive impact on the property and capital markets. If the crisis is allowed to spread and confidence collapses, the risk is that China enters a negative feedback loop of debt and deflation and succumbs into a lost decade in terms of growth.

“Policies already in place, such as demand-side easing and encouraging banks to increase lending to developers, are not enough to solve the current problem. Only equity injections, such as corporate takeovers or nationalisations, are likely to turn around the confidence of home buyers and investors and materially change the situation.”

YAO YU, FOUNDER OF CREDIT ANALYSIS FIRM RATINGDOG:

“Such a move could play a big role in restoring market sentiment. From what we saw being conveyed at the Central Financial Work Conference, finance needs to serve the real economy and letting Ping An take action would reflect the will of regulators.

Country Garden’s delivery of homes would be smoother, and homebuyers’ worries about unfinished homes could be reduced to a certain extent, which would in turn be conducive to the restoration of home-buying confidence for the entire market.

Restoring home-buying confidence would, in general, benefit other private property developers.”

GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG

“It is probably not so much about debt repayment but the policy goal to complete existing projects. Country Garden may have reached a tipping point where it will need more liquidity to fulfill such policy goal. The Chinese government is clearly exploring options, and it is a moment of mobilising state resources to limit contagion risks.”