SHANGHAI/HONG KONG -- China's central bank on Friday said it will set up a new lending program to encourage local governments to "digest" excess housing supply, as the world's second-largest economy grapples with an accelerating decline in home prices.
Under the new initiative, the People's Bank of China will provide "refinancing funds" worth 300 billion yuan ($41.5 billion) with low interest rates to 21 banking institutions. The banks can then issue loans to state-owned enterprises selected by city governments, which in turn will purchase completed but unsold commercial homes and convert them into subsidized housing for low- and middle-income citizens.
