This would be the country's first major step to save the beleaguered property sector since last year's debt troubles became public with the problems afflicting Evergrande. The People's Bank of China (PBOC) will initially support the fund with 80 billion yuan while the China Construction Bank will chip in a further 50 billion yuan, Reuters reports, though the funds will come from the PBOC's refinancing facility.
As part of the government's push to boost rental housing, the fund will reportedly bankroll the construction of unfinished home projects, which will be rented to individuals, and if the model works, other banks will follow suit with a target of raising 200 to 300 billion yuan.
Meanwhile, embattled Chinese real estate giant Evergrande, which has more than US$300bn in liabilities and defaulted on its debts late last year, expects to release a preliminary restructuring plan this week. An internal probe found that the developer's chief executive and finance head misappropriated around US$2bn (£1.7bn) in loans, with the company informing the Hong Kong Stock Exchange that the officials concerned had now resigned. Termed the world's most indebted property developer, Evergrande is reportedly in discussions with its property services unit about repayment terms. Evergrande has missed a crucial deadline for repaying its offshore debt as a US$2.6bn deal to sell a majority stake in the unit to a rival developer fell through in October. Over the last year, its shares have fallen by more than 75% and have been suspended from trading.
China's property sector has been lurching from one crisis to another and has slowed growth in the world's second-largest economy, as almost a quarter of China's gross domestic product (GDP) comes from the property market and related sectors, including construction.