China will ease its "three red lines" policy restricting borrowing by property developers, a central bank official said Friday. Zou Lan, head of the monetary policy department at the People's Bank of China, explained that the change will apply to 30 well‑performing developers deemed systemically important in terms of scale and operations.

The move signals a shift toward economic stability over addressing underlying debt problems. While specifics remain undisclosed, the current cap on a borrower’s debt‑to‑equity ratio is expected to be relaxed. The action plan also includes 100 billion yuan of loans for rental housing and a refinancing scheme for asset management companies encouraging mergers in the industry.

The top 30 developers sold about 5.2 trillion yuan ($775 billion) of housing in 2022, roughly 40% of the national total. Since the 2020 creation of the red lines, banks have cut credit to the sector, leading to a liquidity crunch for firms like China Evergrande Group. Since President Xi’s third term, authorities have loosened curbs, extended loan repayment deadlines, and lowered mortgage rates, though demand remains sluggish and new‑home prices fell over 70% in 70 major cities.

Concerns persist that China is merely punting its debt problem by easing restrictions, but Xi appears to prioritize policies that promote economic and social stability, especially after ending the tech crackdown.