SHANGHAI, (Reuters) – China has asked large property firms owned by both the state and private sectors to purchase distressed developers’ real estate projects to lower the risk of economic collapse.

According to the newspaper, recently, The People’s Bank of China and China Banking and Insurance Regulatory Commission issued a notice to financial institution asking them to increase financial support for acquisitions.

Chinese regulators have moderately relaxed financing restrictions for the real-estate sector in recent months. This is to stop debt risk spreading from distressed developers such as China Evergrande Group or Kaisa Property Holdings.

China Securities Journal reported that regulators are encouraging Chinese banks to lend to finance the acquisition of cash-strapped developer projects and to avoid cutting or withdrawing loans.

According to the newspaper, only acquisitions of real estate properties would be encouraged.

According to the paper, developers with no financial issues are being encouraged to create bonds to help finance these acquisitions. PBOC also encourages financial institutions and financial institutions alike to purchase such debt instruments.

Local media reported that developers including China Merchants Shekou Industrial Zone Holdings Co(001979.SZ), plan to issue interbank-market debt instruments in the short term to finance mergers and acquisitions.