Bloomberg carry the report on the People’s Bank of China (PBOC) injecting nearly US$50 billion worth of low-cost funds into policy-oriented banks in the final month of 2023.
This suggests the Bank may be ramping up financing for housing and infrastructure projects to support the economy.
Bloomberg detail the addition of funds:
- outstanding amount of the PBOC’s Pledged Supplemental Lending (PSL) programme to policy banks climbed to 3.25 trillion yuan (S$602.5 billion) at the end of December from 2.9 trillion yuan in the previous month
- net injection of 350 billion yuan was the largest increase via the tool since November 2022
PBoC Governor Pan Gongsheng
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The PSL programme is seen as an important tool, funds can be used to shore up the property sector and stabilise growth
- money could drive construction of public housing, helping to revive the property slump; the slumpo had fed into a negative feedback loop sapping consumer confidence
Adds Bloomberg:
- The PSL tool was last used heavily between 2014 and 2019 for the rebuilding of shantytowns. That helped to halt a property slump but at the same time inflated home price bubbles. Some economists called it “helicopter money” or “Chinese-style quantitative easing” back then.