As an effective supplement to China's rural revitalization strategy, the recently issued document to offer advice from banking and insurance institutions on providing better services for new urban residents will give all-around support to the urbanization of rural people who have moved to cities, experts said.

The China Banking and Insurance Regulatory Commission and the People's Bank of China, the country's central bank, released a document that aims to offer financial services to new urban residents, referring to people who live in a city permanently but have not yet obtained a local hukou, or those who obtained a local hukou within the past three years.

There are more than 300 million such new urban residents, and they have rigid demand for jobs, starting up businesses, renting or buying homes, child education, child care and eldercare, said Guo Shuqing, chairman of the CBIRC, at a news conference earlier this month.

"We've learned from investigations that many of these people from rural areas are self-employed individuals or migrant workers who are not in permanent employment. According to statistics, the average working time for rural migrant workers in a company or their posts is around six months. However, they are usually required to submit an income certificate while applying for loans, which is quite tricky for them to do," Guo said.

As a result, China launched a special document to offer advice from banking and insurance institutions to provide better services for these new urban residents.

"This has been a part of our efforts, in general, to deal with the issues related to agriculture, rural areas and farmers," he said.

As of the end of 2021, China's urbanization rate of permanent residence hit 64.72 percent, up 0.83 percentage points from the end of 2020, said Wang Pingping, head of the Department of Population and Employment Statistics at the National Bureau of Statistics. The population of new urban residents has been growing along with the continuous hike in the urbanization rate.

The General Office of the People's Government of Beijing Municipality said on March 18 that Beijing will strive for building and acquiring 400,000 units of government-subsidized rental housing during the 14th Five-Year Plan period (2021-25), accounting for 40 percent of new housing supply in the city.

To ensure that new urban residents' demand for housing will be met, financial regulators said banks should ramp up support for government-subsidized housing and renovation of old urban communities. Banking and insurance institutions are encouraged to support healthy development of the rental housing market, promote supply of long-term rental housing, and offer credit support to professional and large-scale home leasing companies.

In addition, regulators also encouraged commercial banks to reasonably set first home mortgage requirements for new urban residents who meet home-purchase conditions and to improve convenience for them to borrow and repay such loans.

At the end of 2020, the PBOC and the CBIRC set regulations to impose caps on the exposure to property lending and mortgage lending to curb concentration risks. However, they said on Feb 8 that government-subsidized rental housing will not be included in the management system, which aims to contain risks from excessive borrowing among property developers and homebuyers.

"Commercial banks should make good use of the new policy and provide financing support accordingly. In particular, they should pay close attention to new urban residents' demand for government-subsidized rental housing," said Du Yang, a researcher with the BOC Research Institute. Du advised commercial banks to make active deployment in the rental housing market under the principle that "houses are for living in, not for speculation".

China aims to have 2.4 million units of government-subsidized rental homes available nationwide this year, said Wang Menghui, minister of housing and urban-rural development, at a news conference on Feb 24.

"The recent document is conducive to stimulating potential reasonable homebuying demand of 300 million new urban residents. The policy adjustment may start from lowering the home purchase threshold and costs for new urban residents so that they will be able to and willing to buy properties," said Chen Wenjing, market research director of the China Index Academy's index division.

It will also help boost housing market vitality, unleash potential homebuying demand and further promote the steady development of the real estate market, Chen said.