Beijing will hand out $148bn in loans for stalled property developments as it attempts to shore up China’s teetering real estate sector.
It is believed the People’s Bank of China will initially issue about Rmb200bn ($30bn), of low-interest loans, charging about 1.75% a year, to state commercial banks. The banks will use the PBoC loans along with their own funds, lent at market rates, to refinance stalled real estate projects. The plan was recently approved by China’s State Council.
The government hopes the banks will be able to leverage its initial fund by up to five times to raise a total of about Rmb1tn and partially fill the funding gap needed to complete unfinished projects. But bank executives and analysts have warned that the PBoC may struggle to raise its targeted amount given the difficulties banks will face in making a return on distressed real estate projects.
