September 11, 2018 / 10:19 AM / 12 days ago

China to step up funding for rural infrastructure projects

BEIJING, Sept 11 (Reuters) - China will provide more cheap funds for rural infrastructure projects through the Pledged Supplementary Lending (PSL) programme, the housing ministry said on Tuesday.

The PSL programme, initiated in 2014, is designed to help the central bank better target medium-term lending rates and boost liquidity to specific sectors by offering low-cost loans to selected lenders, including policy banks.

In a joint statement with a major Chinese policy bank, the Agricultural Development Bank of China, the housing ministry said the two entities would work more closely to better support rural infrastructure and development projects in funding to improve residents’ living conditions in rural areas.

Projects eligible for such PSL funds include those in the area of water, electricity, roads and gas construction, and sewage and garbage treatment, the housing ministry said.

The funding push reflects the ruling Communist Party’s desire to elevate the status of rural areas to fend off risks of social unrest while boosting investment and consumption, as part of an ambitious “rural rejuvenation” campaign christened by President Xi Jinping last October.

While the ministry did not give a specific funding target, the measure will also provide a boost to the economy as authorities fret over slowing investment growth amid rising trade tensions with the United States.

China’s central bank has injected hundreds of billions of dollars using the Pledged Supplementary Lending (PSL) into projects such as the shantytown redevelopment projects (SRP), which has been largely used for cash compensation to residents whose homes are demolished.

Chinese provinces will each invest 100 billion yuan ($14.58 billion) in road-upgrading projects in rural areas, the Shanghai Securities News reported on Monday, citing local government announcement.

Reporting by Yawen Chen and Beijing Newsroom; Editing by Simon Cameron-Moore

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