The PBOC is creating a special relending facility—reportedly worth upwards of 500 billion yuan (approximately $70 billion USD initially, with expectations of expansion to $300 billion). Local state-owned enterprises will borrow from policy banks at near-zero interest rates. They will then negotiate with developers to buy completed but unsold apartments at deep discounts —potentially 40% to 60% below peak market prices.
This is where the new policy steps in. By using state-owned enterprises (SOEs) and local government financing vehicles (LGFVs) to buy up the glut, Beijing hopes to solve two problems simultaneously: clearing developer balance sheets to prevent a wave of mass defaults, and converting these private assets into public housing (social housing and affordable rentals). This is where the new policy steps in
The announcement comes on the heels of data showing that new home prices have fallen at their fastest monthly rate in a decade, with inventory levels piling up to over 750 million square meters of unsold floor space. For the first time since the 2008 financial crisis, Beijing is effectively stepping in as the "buyer of last resort." For the first time since the 2008 financial
However, there is skepticism. Critics argue that this is a short-term fix for a long-term structural problem. The fundamental issue in China is a mismatch between supply and demand—too many homes were built, and population growth is slowing, with an aging demographic reducing the future need for new housing. and population growth is slowing