Rate cuts not ex­pected to help realty sec­tor

China Daily (Canada) - - NEWSCAPSULE -

China’s cen­tral bank’s tar­geted re­duc­tions in banks’ re­serve re­quire­ment ra­tios won’t re­vive the property sec­tor, mak­ing it likely that de­vel­op­ers will have to of­fer more ag­gres­sive price cuts to raise cash, in­dus­try an­a­lysts said.

The People’s Bank of China (PBOC) on Mon­day an­nounced a cut in the ra­tio by half a per­cent­age point, but only for banks whose new loans to the farm­ing sec­tor or mi­cro-sized and small en­ter­prises ex­ceeded half their to­tal new lend­ing in 2013.

“The aim is to chan­nel credit to the ru­ral sec­tor and small firms. That move dashed the hopes of some property de­vel­op­ers for a broad-based credit eas­ing this month, in­creas­ing the prob­a­bil­ity that more de­vel­op­ers will cut prices,” said Zhang Dawei, di­rec­tor of mar­ket re­search depart­ment at Centaline Property Agency Ltd.

Ac­cord­ing to Chang Jian, China econ­o­mist with Bar­clays Plc, the PBOC has re­sisted calls for an across-the-board re­serve re­quire­ment ra­tio cut.

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