ASSESSMENTS
China Pushes to Stabilize its Property Markets
Mar 21, 2013 | 10:31 GMT
PETER PARKS/AFP/Getty Images
Summary
China is attempting to curb rising housing prices that have far exceeded what ordinary homebuyers can afford, but its methods for doing so could expose it to short-term risks from the country's burgeoning informal lending sector. Many wealthy Chinese investors and, even more important, local and regional governments and enterprises have used property markets to earn returns on investments at rates unavailable elsewhere. Reining in such markets could force those investors to turn to semi-officially sanctioned financial products that are being purchased at an alarming pace, even though they are not fully understood and could seriously threaten the entire Chinese economy if they default.
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