A high-profile initiative to fire up funding for Chinese infrastructure has fallen short of meeting regions’ needs and ended up diverting some cash into the real estate sector instead of the public projects it is intended to support, analysis by the Financial Times shows.

Beijing ordered a big increase in the issuance of so-called special-purpose bonds in late 2018, touting them as a way to fund specific projects including irrigation, transport and toll roads. This boost has helped the market to swell to $1.3tn in five years, government data show, pulling a sizeable chunk of local financing out of the shadows.

But a particularly flexible slice of these bonds that can be paid off using projects’ revenues has flowed largely into real estate projects. In total, 90 per cent of this slice has ended up in the sector — an injection worth more than $370bn.