China invested Rmb 990 billion ($143.6 billion) in its huge project to redevelop the country’s urban shantytowns during the first seven months of 2018, Reuters reports.
The huge investment program is designed to demolish poor-quality, run-down housing, particularly in China’s smaller cities, and move the displaced residents into more modern properties. The scheme also has the added benefit, in theory, of filling up the vast numbers of empty apartments that often ring China’s lower-tier cities—the result of rampant overbuilding that threatens to crash the country’s housing market.
The policy has helped boost home sales and prices in smaller cities in recent years, which has helped the Chinese economy recover from the slump of 2015, according to Reuters.
China invested $278.2 billion in the shantytown redevelopment project last year and started construction on 6 million new homes, according to official data. Work has already begun on over 4 million homes during the first seven months of this year.
But the redevelopment efforts may also be creating hidden debt risks due to the credit stimulus it is providing. China’s housing ministry moved to restrict subsidies for new shantytown redevelopment projects to cities with an overheated property market in July.