What’s new: China’s central bank is developing a new policy tool to encourage commercial banks to extend loans to developers struggling with stalled construction, People’s Bank of China Governor Yi Gang said Monday at a forum.
The central bank plans to provide 200 billion yuan ($28 billion) of new loan quotas at nearly zero cost for commercial banks to lend to cash-strapped developers that missed delivery schedules for residential projects, people familiar with the matter told Caixin.
The new lending program will be applied through the end of the first quarter of 2023, with participation of six large state-owned banks and 12 joint-stock banks, sources said.
The central bank previously launched special loans to support unfinished property projects through two policy lenders — China Development Bank and the Agricultural Development Bank.
Why it matters: The new lending program is the latest move by Chinese authorities to shore up the ailing property sector.
Also Monday, top financial regulators at a meeting told banks to stabilize lending to property developers and construction companies. Authorities support the “reasonable” extension of existing real estate development loans and trust loans, according to a statement posted on the central bank’s website.
Policymakers in recent weeks have issued a series of measures including a state-backed bond issuance program and a 16-point package to help developers ease their capital crunch, signaling a shift from the previous tightening stance on the real estate sector.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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