BEIJING – China's Cabinet on Friday approved guidelines for the planning and construction of affordable housing at a meeting chaired by Premier Li Qiang, state media outlet Xinhua news agency reported.

The move comes amid a deepening crisis in the country’s property sector, with a rising risk of default among some developers as they struggle to sell apartments and raise funds.

The guidelines will help improve people’s livelihoods, expand effective investment and promote the stable and healthy development of the property market, Xinhua said, citing the Cabinet meeting.

Xinhua did not reveal details of the guidelines.

Separately, China’s central bank announced guidance on relaxing residential housing loan rules, in a move aimed at boosting loan applications and house purchases.

The People’s Bank of China said banks should treat people without a house in their names at the location of a purchase as first-time home buyers, regardless of whether they previously used a loan for a home purchase.

The central bank also said it would stick to the principle that houses are for living in and not vehicles for speculation.

Beijing has been pushing more affordable housing in recent years as runaway home prices in major cities shut out many young buyers – a plan that has assumed greater significance in the wake of the debt crisis in the property sector and weakening economic growth.

An official at the Ministry of Housing and Urban-Rural Development said in 2022 that China would add 6.5 million new low-cost rental housing units in 40 major cities from 2021 to 2025.

However, with the property downturn, official data showed new home prices fell in July for the first time in 2023, underlining an urgency for bolder policy support.

On Friday, the Housing Ministry, the central bank and the national financial regulator jointly issued a notice easing mortgage policies to help revive the sector.

China's housing market has over the past two years been grappling with a severe debt crisis – initially triggered by government moves to rein in ballooning debt.

The Cabinet on Friday also approved plans to develop the pharmaceutical and medical equipment industries from 2023 to 2025, as it vowed to expand the country’s supply capacity of high-end medicines and key technologies, according to Xinhua.

China will strengthen the protection of traditional Chinese medicine too and safeguard its development, the report said. REUTERS