Chinese Banks Told To Be Careful On Property Loans

Source : The Business Times, August 28, 2008

(BEIJING) China's banking regulator and central bank yesterday ordered commercial lenders to be more careful when lending to real estate developers.

In an joint statement published on the People's Bank of China's website (www.pbc.gov.cn), they said that banks should not lend any money to property developers for land purchases.

The statement also encouraged banks to give preference in their lending to affordable housing projects.

China has introduced a raft of measures to cool the property market, including a clampdown on loans for construction, a requirement for developers to build quickly or lose their land, and a tax on land price appreciation.

The tightening steps have already hit a few markets hard, especially in the southern cities of Shenzhen and Guangzhou.

The statement posted on the central bank's website was dated July 29 and said the guidelines should go into effect immediately. -- Reuters