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| Central Bank Warns of Housing Financial Risks |
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The real estate industry is absorbing too much of the country’s capital and causing government concern China’s central bank, the People’s Bank of China, has said. "Real estate financing is taking up a bigger and bigger share of the country's financial sector,” Wu Xiaoling, deputy governor of the central bank, explained at a seminar Tuesday. “The health of real estate financing is of critical importance to the health of the financial sector,” she said. “We must pay close attention to developments in both the real estate industry and home financing sectors." Housing prices have continued to soar despite the government's year-long efforts to stabilize them and this has sparked deep concerns that the housing bubble could burst. According to Wu, Chinese banks' lending tfo the real estate sector stood at 3.07 trillion yuan (US$380 billion) at the end of 2005 which accounted for 14.84 percent of all Renminbi loans by China's financial institutions. This was equivalent to 16.75 percent of the country's gross domestic product (GDP) in 2005. The lending to individual house buyers by Wu maintained that However, she said the country's housing finance system was still dogged by many unresolved issues including a lack of appropriate lending for lower-income buyers and the over-concentration of risk take by banks. The deputy governor noted that the bursting of the housing bubble in "The central bank must accelerate its research on housing finance and work for the healthy development of the sector," she said. (Xinhua News Agency April 26, 2006) |
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