Beijing’s financial risks up on property downturn
BEIJING: Moody’s Investors Service warns that the financial risks facing China from a potential property downturn has grown as record lending has made banks more risk-prone while the government is less able to combat those risks.
China extended a record 12.65 trillion Chinese yuan (RM8.13 trillion) of loans last year to support economic growth, half of which was household loans — mostly mortgages — sending new home prices to five-year highs in the year.
Policymakers now face the prospect of a nasty property market crash damaging the economy.
More large cities on China’s wealthy east coast — Fuzhou, Xiamen, and Hangzhou — stepped up property curbs again this week, following Beijing’s drastic moves that analysts say could freeze the market.
Fuzhou, Xiamen and Hangzhou home prices rose 23.7 per cent, 36.5 per cent and 25.4 per cent year-on-year last month, according to statistics bureau data.
Recent weeks have seen the biggest wave of tightening of home purchase and lending rules since October last year, as China’s red-hot property market picked up pace in February after price gains had slowed in the previous months.
“Previously, the banking sector’s exposure to the property market was relatively modest,” says Lillian Li, a Moody’s vicepresident and senior analyst. Reuters
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