China’s central bank added RMB 500 billion ($70 billion) worth of low-cost loan quota for policy-oriented banks in 2023 to ramp up financing for housing and infrastructure projects and bolster the economy, according to a report by the People’s Bank of China, reports Caixin. By the end of December, the outstanding amount of the PBOC’s Pledged Supplemental Lending (PSL) program to policy banks was RMB 3.25 trillion, an increase from RMB 2.9 trillion in the previous month, according to data released by the central bank. The monthly net injection of RMB 350 billion was the largest increase via the program since November 2022.
The funds were handed out to the country’s policy lenders, including the China Development Bank, the Export–Import Bank of China and the Agricultural Development Bank of China, to finance affordable housing and urban renovation projects and invigorate the housing market. About RMB 150 billion of the PSL quota remains to be allocated, said the PBOC in an article published on its official WeChat account.
The PSL program is seen as an important tool in Beijing’s arsenal to support growth of the world’s second largest economy. Since its creation in 2014, the PBOC has used PSL to inject money into the economy through loans to policy banks for specific purposes such as shantytown redevelopment, underground pipeline construction and major water conservancy projects.