China Central Bank Boosts Policy Bank Loans for Housing Support
China’s central bank provided 350 billion yuan ($49.1 billion) in loans to policy banks through its pledged supplementary lending (PSL) facility in December, signaling increased assistance for the country’s struggling housing sector.
The data, released by the People’s Bank of China in a statement on Tuesday, indicates the first monthly rise in PSL loans since November 2022. Between September and November 2022, the PBOC granted 630 billion yuan in such loans to support the Chinese economy during the COVID-19 pandemic.
Analysts suggest the increase in PSL loans may signify strengthening quasi-fiscal policies, with potential areas of focus including infrastructure construction and affordable housing.
Reports suggest that Beijing plans to provide at least 1 trillion yuan of low-cost financing to China’s urban village redevelopment and affordable housing programs to bolster its struggling property market. Outstanding PSL loans were at 3.252 trillion yuan at the end of December, compared with 2.902 trillion yuan at the end of November, PBOC said.
The PSL program, initiated in 2014, was originally designed to support any property downturn by funding urban redevelopment to push up property prices.
China relied heavily on PSL loans to support its shanty-town renovation during 2015-2018. ($1 = 7.1348)
