China is providing a €29 billion rescue package for the country’s construction sector

China will offer 200 billion yuan in special loans to ensure stalled housing projects are handed over to buyers, people familiar with the matter said, stepping up financing support for its troubled real estate sector.

The previously unreported size of the loan program, announced Friday with scant details by China’s housing ministry, finance ministry and central bank, would be Beijing’s biggest financial commitment yet to stem a housing crisis that has caused house prices to plummet and home sales to fall.

Hundreds of thousands of middle-class Chinese are left in limbo after making down payments and borrowing on properties that budget-strapped developers are now struggling to complete.

Some homebuyers have begun boycotting mortgage payments, a threat to social stability during the politically sensitive run-up to the Communist Party leadership change later this year.

The People’s Bank of China and the Ministry of Finance will funnel the money through political banks like the China Development Bank and the Agricultural Development Bank of China, said the people, who asked not to be identified.

The special loans are only used for houses that have already been sold but not yet completed.

The PBOC, Treasury Department and Housing Department did not immediately respond to requests for comment.

“We consider the central government’s introduction of bailout financing to be the first meaningfully positive development in the past five to six weeks,” Jizhou Dong and Stella Guo, analysts at Nomura, said in a statement on Sunday.

They estimated that the financing would need to reach at least 200-300 billion yuan as an initial investment to be effective. China is providing a €29 billion rescue package for the country’s construction sector

Fry Electronics Team

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