China used a controversial tool to inject funds into policy banks for the first time in more than two years.
Beijing increasingly relies on the semi-official lenders to support the economy while monetary easing is constrained by rising global interest rates.
The People's Bank of China added 108.2 billion yuan (HK$118.8 billion) in Pledged Supplemental Lending last month for China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China, said a statement by the central bank over the weekend.
That marked the first monthly increase in the tool since February 2020 and took the outstanding value of the lending to 2.65 trillion yuan.
The PBOC created PSL in 2014 to provide cash for policy banks to finance the shantytown renovation program, which helped turn around a property market downturn back then, but was heavily criticized later for inflating the real estate bubble in lower-tier cities.
The relaunch of the tool suggests the government is seeking every possible way to expand the funding source for policy banks. Beijing in recent months has focused on stimulus via policy lenders, given that fiscal spending is limited by stretched local government finances and further monetary loosening is hard to deliver due to rate increases in the US and elsewhere.
