The failure of the PBoC initiative to resolve the problem of unfinished homes illustrates the complexity of trying to design measures to revive China’s property sector.
| A flagship Beijing lending program to revive the country’s debt-stricken property market has done barely any business almost a year after its launch, officials say, highlighting the difficulty for policymakers seeking to boost confidence in the world’s second-largest economy.
“For Chinese banks, the downside of lending to distressed property projects far outweighs the upside,” said Larry Hu, chief China economist at Macquarie. Tens of thousands of frustrated homebuyers, who often begin paying mortgages before properties are completed, have launched boycotts, while construction delays have deterred new buyers from entering the market.
Policymakers have unveiled a series of measures, led by the PBoC-backed bailout fund and low-interest loans from policy banks, targeted at restarting construction, while large cities haveThe central bank, which launched the bailout fund in November, initially planned to charge commercial banks 1.75 per cent interest before later cutting rates to zero to encourage their participation.
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