China allocates billions of dollars to bailout its crisis-hit property sector
economic growth. The People's Bank of China has announced that it would establish a 300-billion-yuan (about USD 42.25 billion) relending facility for the government-subsidized housing project.
Local state-owned enterprises are encouraged to use the funds to buy reasonably-priced commercial homes that have completed construction, Tao Ling, deputy governor of the People's Bank of China, told the media last week. Tao added that these homes will then be used to provide affordable housing.
Also, as part of the government's increased financial efforts to support the property sector, commercial banks across the country issued a total of 963.6 billion yuan (about USD 137 billion) in real estate development loans followed by billions of yuan loans for individual housing loans in the first quarter of the year, state-run Xinhua news agency reported.
The newly set up fund will help developers to have access to financing and to encourage the repurchase of «idle» land and the «relending» funds will enable local state-owned enterprises to buy unsold homes they can then offer as affordable housing, according to Chinese media reports.
Besides being unusually large, China's property sector accounted for about a quarter of annual output of its economy and was highly connected to other parts of the Chinese economy.
The household wealth in China is also highly concentrated in property. Just as systemically important financial institutions had to be rescued to prevent a
