The PBOC said it has disbursed 263 billion RMB ($42 billion) worth of pledged supplementary loans (PSL) so far this year to the end of May. For information on how the PSL program works, see my PBOC infographic. PSL activity should be viewed as targeted stimulus, not broad easing. The PSL activity this year has been used to support China's urbanization, according to the central bank.
263 billion RMB amounts to roughly 0.19% of total outstanding credit, and compares to 1.8 trillion RMB (if fully utilized) of easing from the two RRR cuts so far this year.
Through the PSL this year, specific banks have borrowed money against collateral at 3.1%, compared to 4.5% last year, reflecting the PBOC's efforts to bring down rates this year.
PSL activity this year will have little impact on overall growth and credit in comparison to other PBOC actions, but will be a modest positive for urbanization efforts and infrastructure spending.