According to the Financial Times, the People's Bank of China is considering a $148.19 billion bailout package to be used in failing real estate projects as part of its goal of reviving the real estate development sector, which is heavily indebted.
According to the newspaper's report, the People's Bank of China will initially extend a loan of 200 billion yuan ($29.64 billion) to commercial public banks at an annual interest of 1.75 percent. Under the plan, officials hope banks can increase that amount fivefold to $1 trillion.
The newspaper warned, however, that bank executives and analysts may find it difficult to raise the target amount of the PBOC, given the difficulties banks face in generating returns from distressed real estate projects.
Real estate stocks and bonds rallied on Monday after REDD, a news outlet on emerging markets, reported that China's State Council had approved a plan to set up a fund to support developers. Bloomberg News first reported some aspects of the plan last week.
The plan is seen as part of a broader plan, involving local governments and banks, to stabilize China's struggling housing market.
The Chinese, who have recently invested in delayed housing projects in the country, started a boycott process by not making their mortgage payments. The boycott recently affected at least 230 projects in 80 cities.