BEIJING (AP) — China on Tuesday rolled out new measures to help boost its economy and sluggish property sector as pressures ramp up ahead of a year-end target for hitting the government’s economic growth goal.
The measures, some of the bigger moves made this year by Chinese officials, include encouraging targeted bank lending and new subsidies for homebuyers’ mortgage interest payments.
China’s central bank — the People’s Bank of China — said it will be lowering the interest rate for its “pledged supplementary lending” facility, or PSL, by a quarter of a percentage point, bringing the one-year rate down to 1.5%.
PSL is low-cost financing that China’s central bank provides to its major state policy banks to support state and public projects. The central bank said that by cutting the rates it hopes to better incentivize banks and better “serve national strategies.”
The central bank will also increase the quota of relending for technological innovation by 200 billion yuan (about $30 billion) to a total of 1.4 trillion yuan ($208 billion).
Separately, China’s Ministry of Finance announced new mortgage interest subsidies for homebuyers. From October, eligible first-time homebuyers can receive subsidies equal to an annualized rate of 1 percentage point on the mortgage principal, for a period of up to five years.
To qualify for the subsidies, the purchased property should measure up to 120 square meters (1,292 square feet) in floor area and its price should be up to 1.5 million yuan ($224,000).
Tuesday’s measures represent “a targeted approach with lower funding costs to support selected sectors through policy banks and the real estate sector,” said Gary Ng, a senior economist for Asia Pacific at French bank Natixis.
For the property sector, they aim “to support housing demand in lower-tier cities, which are still facing severe headwinds,” Ng added.
Chinese leaders are targeting a 4.5%-5% growth rate for its economy for the whole of 2026, slower than last year’s 5% growth. In the April-June quarter, China reported its economy slowed to a 4.3% expansion — the weakest growth pace in more than three years.
The country’s property sector has been under yearslong pressure following a liquidity crunch in its real estate industry that came after Chinese officials’ cracked down on excessive borrowing, with overall home prices falling roughly 20% or more, compared to 2021.
Tuesday’s measures are likely meant to help China meet the minimum annual growth target, Ng said.
The announcements also came after China’s State Council on Monday discussed strengthening and improving the effectiveness of macro policies in response to challenges in the economy.