The central bank's Shanghai headquarters said last weekend it
will intensify supervision on credit flows of both real estate
developers and house buyers, the Beijing Times reported
today.
This is the first time that the central bank has signaled
potential risks in housing loans.
The tightening policy follows a policy signal sent by the
Monetary Policy Committee under the central bank, which said
recently that the sound monetary policy featuring a steady and
moderate tightening should be continued according to the current
condition of the economy.
As a result, in the second half of this year, real estate
developers are expected to get fewer loans from lenders while some
weaker developers will lapse into capital crisis. The change in
asset market could also increase loan risk.
A report issued by Standard Chartered Bank also said that most
Asian economies, including China, are far away from severe
excessive liquidity. They are all tightening credit controls to
curb inflation.
No matter what tightening measures are adopted, the cost to
developers will likely rise and speculation will be restrained.
(China Daily July 31 2007)
