China Central Bank extends CNY 350 billion to support Housing Sector

In December, China and its central bank provided 350 billion yuan ($49.1 billion) to political banks through the Pledged Supplemental Loan (PSL) program, raising hopes for more support for the housing unit. The People's Bank of China released the information in a statement on Jan 2 but did not say how the banks, including the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China, use the funds.

This is the first monthly increase in PSL funding since November 2022. The PBOC raised 630 billion yuan in these funds from September to November 2022 to support the economy during the COVID-19 pandemic. China plans to provide at least 1 trillion Yuan of low-cost financing to the country's urban village redevelopment and affordable housing programs to shore up the struggling property market, Bloomberg News reported in November.

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 help support any property downturn by funding urban redevelopment across the country, pushing up property prices in the process. China relied heavily on PSL loans to support its shanty-town renovation during 2015-2018.