Property correction under control, says CASS paper
Updated: 2014-06-14 07:25
By Hu Yuanyuan (China Daily)
|
|||||||||||
Chinese banks' exposure to the property sector, while not excessive by international standards, is still substantial and a principal source of risk in an environment of tightening liquidity, Fitch said in a recent report. Si Wei / for China Daily
Fitch: Lenders' increased exposure to housing sector still cause for concern
The correction in China's real estate sector remains under control and its impact on the overall economy is bearable, an official of the country's top think tank said on Friday.
"Based on our research, the risks from the property market are still controllable," Li Yang, vice-president of the Chinese Academy of Social Sciences, told the China Insurance Development Forum.
|
Liu Mingkang, former chairman of the China Banking Regulatory Commission, said that during the previous real estate correction of 2008-2009, banks could bear the risks even though property prices fell by 50 percent.
According to global ratings agency Fitch Ratings Inc, property development and mortgages reportedly account for more than 20 percent of the loans of banks rated by Fitch.
"But total exposure could be higher, considering the risk of misclassification of loans and exposure that may reside off-balance sheet," said Jonathan Cornish, managing director of Fitch's financial institutions division.
Chinese banks' exposure to the property sector, while not excessive by international standards, is still substantial and a principal source of risk in an environment of tightening liquidity, Fitch said in a recent report. Indeed, the "shadow banking" sector has been an important source of funding for smaller or weaker property development companies, the report said.
China's property sector has been undergoing a correction since the beginning of 2014, with sales plummeting and prices sliding. The average price in 100 key cities was 10,978 yuan ($1,784) per square meter in May, down 0.32 percent month-on-month, according to the China Index Academy Ltd, a Beijing-based research institute that's wholly owned by SouFun Holdings Ltd. That marked the first month-on-month drop since June 2012.
A collapse in prices is not a core scenario, while the scale of exposure amid a slowdown is a significant macro risk, according to Cornish.
Related Stories
Chinese property firms' overseas expansion 2014-06-12 16:55
22.4% urban homes lying vacant in China: report 2014-06-12 09:31
Home purchase curbs being eased in more cities 2014-06-12 06:54
Experts: Rate cuts won't aid realty sector 2014-06-11 07:01
China property market down cycle may last longer: Moody's 2014-06-09 09:13
Banks' exposure to real estate healthy: official 2014-06-06 15:17
Today's Top News
China finds way to play in 2014 World Cup
Protocol targets sex violence
Premier all business on Europe trip
Poland-China train on maiden trip
Iraq facing 'mortal threat' from militants
China, Italy boost ties
Brazil averts strike before WCup
Red meat 'linked to cancer'
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Crackdown on terrorist attacks |
My China Story: Meeting the master |
Long march to end employment bias |
Variety is the spice of academic life |
Documents prove the truth can't be buried |
Race to remember story of resistance |