HONG KONG—Chinese regulators have quietly reopened an onshore funding spigot for the country’s property developers, enabling some firms to tap into an obscure form of debt financing that helps pay their suppliers.

Over the past four years, real-estate developers from China Evergrande Group to Country Garden Holdings Co. were regular users of yuan-denominated debt instruments known in the industry as “supply chain asset-backed securities.” Property firms were behind the equivalent of more than $38.6 billion in such bonds that were issued last year, according to Wind data, a huge jump from $12.4 billion in 2019. The actual totals are likely higher, because some deals from developers weren’t classified as such.

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