China will issue RMB 200 billion ($29 billion) in special loans to help developers finish stalled housing projects, reports Nikkei Asia. The Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the central bank will support developers through special loans from policy banks, state broadcaster China Central Television reported.
Confirmed from several independent sources, the loans will be initially provided by China Development Bank and Agricultural Development Bank of China, and the Export-Import Bank of China may join the effort later.
A liquidity crisis among China’s property developers has led to a plunge in new projects and put about 5% of existing apartment construction on hold, sparking mortgage payment boycotts by angry homebuyers. The spreading mortgage strike has sparked fears that the crisis will further squeeze Chinese banks, which are already grappling with liquidity stress among developers. The strike also poses a risk to the broader housing market by keeping homebuyers on the sidelines.