(Yicai) Jan. 31 -- Guangzhou is one of 10 Chinese cities to have begun issuing special loans intended to fund the rebuilding of so-called urban villages, shantytowns in or near urban centers that were once rural villages but have since been swallowed up by towns and cities. 

Guangzhou was granted CNY142.6 billion (USD20.1 billion) by China Development Bank and Agricultural Development Bank of China for the overhaul of 14 urban villages and issued the first CNY1.5 billion (USD208.9 million) loan to acquire old houses, compensate residents for relocation, and build new homes, the southern city announced yesterday.

The other cities to have made their first such loans are Nanjing, Suzhou, Ningbo, Hefei, Chengdu, Shijiazhuang, Shenyang, Guiyang, and Jinan, Yicai learned.

Last July, the State Council said it would support super-large cities and mega-cities to start a new round of urban village revitalization by bringing some eligible projects into the scope of local government bonds. China has seven super-large cities with a permanent population of more than 10 million and 14 mega-cities with a permanent population of five to 10 million.

To provide funds to rebuild urban villages, the People’s Bank of China, the country’s central bank, last month extended CNY350 billion to China’s three policy banks -- CDB, ADBC, and Export-Import Bank of China -- through its pledged supplementary collateral loans facility.

The PSL facility is a monetary policy tool established by the PBOC in 2014 to support key areas of social and economic development by providing large-scale and long-term financing to policy banks. In addition to urban village revitalization, the PSL facility will also be used to fund affordable housing and public infrastructure projects.

Editors: Dou Shicong, Futura Costaglione