PBOC Sets Terms for Banks’ Cheap Loans to Fund SOEs’ Home Purchases
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China’s central bank has sent detailed instructions to the country’s major lenders to support a new pillar in the government’s strategy to rescue the property market, unlocking the door to billions of yuan of loans for local state-owned enterprises (SOEs) to buy unsold homes and turn them into affordable housing units.
The People’s Bank of China (PBOC) sent a directive on May 31 to 21 national banks, consisting of policy lenders, state-owned banks and joint-stock banks, on how to implement a 300 billion yuan ($42 billion) relending program aimed at reducing a record glut of unsold new properties, sources with knowledge of the matter told Caixin.
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- China’s central bank launched a 300 billion yuan ($42 billion) relending program for SOEs to buy unsold homes and convert them into affordable housing.
- The scheme involves major banks lending to local SOEs, with the central bank providing 60% of the loan principal at a 1.75% interest rate.
- The initiative aims to reduce the surplus of unsold properties from 759.7 million square meters and stabilize the real estate market amidst prolonged downturns.
- End of February 2024：
- Stock of unsold new property stood at a record 759.7 million square meters.
- April 30, 2024：
- Politburo's meeting called for measures to reduce the stock of unsold homes.
- May 17, 2024：
- Relending program aimed at reducing the glut of unsold new properties was announced.
- May 31, 2024：
- The People’s Bank of China (PBOC) sent a directive to 21 national banks on how to implement the relending program.
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