Central Bank Calls for Strict Curbs on Lending for Real Estate Speculation, Overcapacity Industries

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The People’s Bank of China has flagged strict curbs on lending to real estate speculators and overcapacity industries in its latest report on the Chinese financial sector.

In its 2017 China Regional Financial Operating Report, the Chinese central bank called for “strict restrictions on the flow of loans towards investment in or speculative purchases of homes,” alongside continued support for the “rational” purchase of houses by owner-occupiers.

The report noted that the implementation of the central government policy directive that “houses are for occupation not speculation,” as well as strengthening of real estate control policies on a municipality by municipality would lead to a fall in property transaction volumes across the country and slight declines in price levels.

PBOC also called for a “suspension of financial support for laggard productive capacity” ┬áin the report, as well as recommended the “full use of market-based, rule-of-law based methods to properly perform productive capacity removal work for overcapacity industries.”

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