The "Three Major Projects" of Monetary Policy Tools Enhancement
The People's Bank of China recently released the progress of mortgage supplementary loans in January 2024, with a net increase of 150 billion yuan in newly added mortgage supplementary loans (PSL) from the China Development Bank, the Export Import Bank of China, and the Agricultural Development Bank of China. The balance of supplementary mortgage loans at the end of the period is 3402.2 billion yuan.
It is worth noting that after the resumption of PSL investment of 350 billion yuan in December 2023, the People's Bank of China has once again invested 50 billion yuan in PSL. Research institutions believe that this round of PSL investment is mainly used for the construction of affordable housing, urban village renovation, and the construction of public infrastructure for both emergency and basic needs, releasing signals of policy efforts to promote stable growth.
PSL was established by the People's Bank of China in April 2014. As one of the structural monetary policy tools, the main function of mortgage supplementary loans is to support the development of key areas, weak links, and social undertakings of the national economy and provide long-term large-scale financing to financial institutions. The Central Economic Work Conference held in December 2023 proposed to actively and prudently resolve real estate risks, meet the reasonable financing needs of real estate enterprises of different ownership equally, and promote the stable and healthy development of the real estate market. Accelerate the construction of affordable housing, public infrastructure for both emergency and basic needs, and the renovation of urban villages.
The Chief Economist of CITIC Securities clearly believes that the "three major projects" are one of the focus of this year's work, which can to some extent hedge the impact of downward risks in the real estate market on the macroeconomy. At the same time, the "three major projects" are important measures to improve people's livelihoods and fill gaps, which are necessary and feasible.
The reporter noticed that as of January 30th, multiple cities across the country have announced the implementation of the first special loan for urban village renovation, involving banks such as the National Development Bank and the Agricultural Development Bank of China. On January 30th, the China Development Bank issued the first batch of 9.08 billion yuan in special loans for urban village renovation, involving nearly 100 projects in cities such as Guangzhou, Zhengzhou, Jinan, Nanjing, and Shijiazhuang, benefiting over 100000 households and constructing 238400 resettlement houses.
According to officials from relevant departments of the China Development Bank, since 2023, the bank has established a dedicated team to actively coordinate and implement financial support policies, simultaneously formulate internal credit business measures, establish communication mechanisms with local governments, cooperate with overall planning, and promote project implementation in compliance. The development bank provides loans in accordance with the principles of marketization and rule of law, strictly implements the requirements of dedicated funds and closed management, disburses loans according to project implementation progress, and promotes the implementation of urban village renovation projects in compliance.
On January 30th, the Agricultural Development Bank of China issued a loan of 79 million yuan for the Nangaoji Urban Village Renovation Project in Xinhua District, Shijiazhuang City. During the same period, the Agricultural Development Bank of China also invested 4.05 billion yuan and 1.084 billion yuan respectively in Jinan and Chengdu to support the first batch of project special loans.
According to market research institutions, the PSL issued by the People's Bank of China to policy banks is likely to be the main source of funding for this round of special loans for urban village renovation. Industrial Securities recently released a research report stating that the net increase in PSL this round is 500 billion yuan, and the funding support for the "three major projects" is expected to continue to increase. The "three major projects" represented by the renovation of urban villages and the construction of affordable housing have continuously benefited from funding, which helps to solve the difficulties in fundraising and income levels in the promotion of some regional projects, and accelerate the landing of related projects.