(Bloomberg) -- China will offer special loans through policy banks to ensure projects are delivered to buyers, adding to signs of official support for an industry grappling with a debt crisis and slumping home sales.
The help will be extended only to projects facing difficulties with delivery, the official Xinhua News Agency reported Friday, citing a statement jointly issued by China’s housing ministry, Finance Ministry and the People’s Bank of China.
The move shows regulators are stepping up financing to the nation’s embattled real-estate sector, which has seen mortgage boycotts by hundreds of thousands of middle-class Chinese still waiting to see the homes they booked as cash-strapped developers struggle to finish construction.
The protracted property downturn represents a big drag on growth. The pace of gains in GDP in the second quarter was the slowest since the initial Covid outbreak in Wuhan, and economists expect full-year expansion could reach just 4% or less this year.
With the property market continuing to weigh on the growth outlook, economists have called for more policy stimulus. In response to China’s deepening economic slowdown, the People’s Bank of China unexpectedly cut interest rates earlier this week, though that step has done little to allay concerns.
Earlier this year, China allowed banks and bad-debt managers to loosen restrictions on some loans to ease a cash crunch. In April, the central bank held a meeting with about 20 major banks and asset-management firms to help resolve crises at a dozen large real estate firms including China Evergrande Group.
Bank lending to the real estate sector dropped for the first time in 10 years, and the decline could persist, according to Bloomberg Intelligence analyst Kristy Hung.
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