Explainer | 13 of China’s biggest fiscal manoeuvres to boost economy since the pandemic years

The People’s Bank of China keeps a running tab of big policy moves, and it shows trillions of yuan worth of support measures employed since 2021
Initiatives have generally been sector-specific, with financial authorities intent on taking targeted steps rather than heeding market calls for a full-blown stimulus

People’s Bank of China (PBOC)

Sophie Chew

Published: 11:00pm, 23 May 2024

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China’s recent unveiling of a massive relending package to help rescue the distressed property sector marks the latest in a series of targeted schemes to support small businesses, shore up the agriculture sector and amplify poverty-alleviation efforts across the country.

The use of structural support tools in recent years has largely reflected an intention by the People’s Bank of China to hone in on specific obstacles impeding growth of the world’s second-largest economy, rather than embrace across-the-board loosening, despite persistent market calls for more impactful stimulus measures in the wake of the pandemic.

As of the end of last year, the size of the relending tools on offer totalled 7.5 trillion yuan (US$1.03 trillion), or 16.4 per cent of the central bank’s assets, according to its publicised figures.

Here, the Post breaks down where the PBOC has splashed out on relending programmes and support measures in recent years.

May 2024: Relending funds to help turn unsold homes into affordable housing (300 billion yuan)

The scheme represents China’s most ambitious undertaking to rescue the property sector and shore up the broader economy. The relending funds are intended to clear excess housing inventory, coupled with measures that ensure that developers have access to financing and that encourage the repurchase of “idle” land.

April 2024: Relending for tech innovation, equipment renewals and upgrades (500 billion yuan)

The scheme revived two measures – initially introduced in 2022 as temporary tools – in April, amid Beijing’s push to make technological development a cornerstone of economic growth.

The one-year facility encouraged lenders to provide loans for projects focusing on hi-tech innovation and development, as well as equipment renewal and upgrading, at a rate of 1.75 per cent.

February 2023: Rental housing support pilot programme (100 billion yuan)

As one of its multiple tools to address the property crisis, Beijing announced that support would be given to seven national banks to facilitate the bulk acquisition of unsold existing housing and expand the rental housing supply in eight pilot cities.

The scheme was set to expire at the end of 2024, and it appears the central bank has approved about 100 billion yuan worth of mortgage loans under this facility.

January 2023: Support for developers (160 billion yuan)

This one-year scheme channelled support to embattled real-estate developers through five major asset-management companies – Huarong (now known as Citic Financial Asset Management), Great Wall, Orient, Cinda and Galaxy – to support refinancing deals.

Up to 160 billion yuan of support was issued, comprising 80 billion yuan from the central bank and the remaining balance from the firms’ own funds.

November 2022: Housing delivery (200 billion yuan)

With unfinished projects piling up around the country, banks were given support to incentivise them to issue loans for overdue residential housing projects and to facilitate their eventual delivery. The scheme was set to expire at the end of May 2024.

November 2022: Second-phase private enterprise bond financing

This scheme supported professional institutions in stabilising and promoting private enterprise bond financing. It was introduced in November 2022 and was slated to run through October 2025.

Fourth quarter of 2022: Interest rate reduction for toll-road loans

This temporary measure, unveiled in late 2022, encouraged national lenders to cut interest rates on toll-road loans by 0.5 percentage points.

Fourth quarter of 2022: Interest rate reduction for small and micro loans

Another short-term measure, this scheme incentivised financial institutions to cut the interest rate on loans to small and micro-sized businesses by 1 percentage point.

May 2022: Transport and logistics (100 billion yuan)

This temporary scheme provided funding for banks to support transport- and logistics-related businesses, including road-cargo operators and warehousing and distribution businesses. It ran until June 2023.

April 2022: Senior-care services (40 billion yuan)

This supported loans for projects to help elderly residents in five pilot provinces, including via the construction of home- and community-care facilities, as China has looked to address its rapidly greying population. The initiative was introduced in April 2022 and will run until the end of 2024.

December 2021: Small and micro loan support

These loans to local financial institutions have encouraged them to issue small and micro loans. The scheme was introduced in late 2021 and will run until the end of 2024.

November 2021: Clean coal (300 billion yuan)

Following a pledge by President Xi Jinping that China would “strictly control” coal consumption, this scheme, which ran from 2021 until the end of 2023, supported loans with a preferential rate of 1.75 per cent for projects relating to the clean production and processing of coal.

It was initially issued with a cap of 200 billion yuan and later raised to 300 billion yuan.

November 2021: Carbon-emission reduction

Aimed at supporting China’s alternative-energy sector, a national priority industry, these loans were aimed at financing carbon-emission-reduction projects at a rate of 1.75 per cent on up to 60 per cent of the principal. They have covered projects in clean energy; energy conservation and environmental protection; and carbon-emission-reduction technology. The scheme will expire at the end of 2024, and the central bank has said it involves hundreds of billions of yuan.

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