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As part of efforts to provide liquidity to China’s crisis-hit property sector, the country’s housing authority announced that 162 projects in 57 cities have received bank financing of ¥29.43B ($4.09B) under a “white list” mechanism launched last month.
Under this mechanism, city governments recommend residential projects eligible for financial support from banks.
In total, development loans of ¥123.6B yuan ($17.20B) have been approved for “white list” projects, according to data from Bank of China, China Construction Bank, Agricultural Bank of China, Postal Savings Bank of China and some joint-stock banks.
As of February 20, 214 cities in 29 provinces of China have proposed a “white list” of 5,349 projects.
Under this mechanism, banks that refuse to lend money to any “white list” projects must explain their decision to financial regulators. This is because Chinese banks are hesitant to lend to the ailing property sector.
The SSE Composite Index (SSE50) gained 1% on Tuesday, while the Global X MSCI China Real Estate ETF (NYSEARCA:CHIR) rose 1%.
To note, the PBOC this week announced the biggest-ever cut in the benchmark mortgage rate, which ING economists said was “likely aimed at supporting the recovery of the property market,” but could further pressure Chinese bank margins.
Currency: (CNY:USD)