According to persons familiar with the situation, China wants to give at least 1 trillion yuan ($137 billion) in low-cost financing to the country’s urban village redevelopment and affordable housing schemes in its latest bid to shore up the faltering property market.

According to the persons who asked not to be named because they were discussing a private subject, the persons’ Bank of China would infuse cash in stages via policy banks, with the money eventually trickling down to families for home purchases. According to the persons, officials are exploring possibilities such as Pledged Supplemental Lending and special loans, and the government may take the first move as soon as this month.

The idea, which is part of a new program launched by Vice Premier He Lifeng, would represent a significant step forward in the government’s efforts to put a floor under the worst property slump in decades, which has dragged on economic growth and consumer confidence. Market worries are growing over the financial stability of the country’s top developers, after the default of many of them. 

As of October, China’s outstanding PSL was at 2.9 trillion yuan. A net investment of 1 trillion yuan into such a credit facility in 2019 would push it over the previous record. According to the sources, the ultimate amount of the additional investment is open to change.

The PBOC did not react quickly to a request for comment.

Dubbed by some as “helicopter money,” PSL allows the central bank to provide low-cost funds through policy and commercial lenders to the developers of the shantytown renovation projects. Developers then use the money to buy land from local governments, which in turn give cash subsidies to households whose old homes were demolished so they can purchase newly built or existing apartments, driving up demand. 

State-owned developers such as China Resources Land Ltd. benefited greatly from the prior growth of inexpensive housing projects.

The PSL program, on the other hand, is a contentious instrument. It was created in 2014 to help turn around a property market slump, but it was subsequently strongly criticized for increasing the real estate bubble in lower-tier cities. 

As the shantytown initiative came to an end in 2019, the central bank mostly ceased releasing additional PSL cash. However, it was temporarily reactivated last year to assist policy banks, which are less profit-driven than state lenders, in providing finance for infrastructure projects.

The current proposal comes after Beijing proposed an unusual fiscal stimulus package last month, including an increase in the budget deficit via the sale of 1 trillion yuan in national bonds. 

Despite an improvement in the third quarter, the world’s second-largest economy remains on a rocky recovery road. Official figures being out Wednesday are anticipated to reveal that economic growth slowed in October, despite headline numbers seeming excellent in comparison to last year.