CHINA’S central bank called on major financial institutions to take the lead in keeping credit growth stable with the nation’s economy at a critical moment. 

Financial institutions, especially major state-owned banks, should increase loan issuance to the real economy, said the People’s Bank of China (PBOC) in a statement late Monday (Aug 22). They should also improve the credit support for small- and micro-enterprises, green development, scientific and technological innovation and other fields, it said.

“We must consolidate the foundation of economic recovery and development with a sense of urgency that no time can wait,” it said. 

Chinese lenders lowered their benchmark rates. The five-year loan prime rate, a reference for mortgages, was reduced by 15 basis points to 4.3 per cent after having been cut by the same magnitude in May. 

China is taking drastic action to help a real estate market beset with problems. Home sales continue to plunge, property investment is contracting, cash-strapped developers are struggling to complete projects and homebuyers are boycotting mortgage payments. 

China is planning to offer 200 billion yuan (S$40.9 billion) in special loans to ensure stalled housing projects are delivered to buyers, Bloomberg reported earlier, citing people familiar with the matter. These special loans would be the biggest financial commitment yet from Beijing to contain the crisis. The funds will be channelled through China Development Bank and Agricultural Development Bank of China, said sources,

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Latest data shows that China’s credit growth slowed sharply in July, weighed down by the property slump and weak consumer and business demand. BLOOMBERG