China's major banks have stopped lending to real estate developers as the government tries to cool an investment boom and surging home prices, a state newspaper said Monday.
The top four state-owned lenders suspended credit to developers at the end of October after exhausting the industry's annual loan quota, China Real Estate Business said, citing unnamed bank employees. It said the government limit for total real estate lending next year might be reduced by up to 20 percent.
Chinese regulators are trying to cool surging credit, worried that runaway lending might be fueling a dangerous boom and bust in real estate. Beijing hiked interest rates last month and ordered banks last week to increase reserves in a move to reduce the pool of money for lending as it tries to restore normal economic conditions.
China's stimulus-fueled recovery from the global crisis was based in part on a flood of lending that triggered a real estate boom. But regulators have been tightening controls since April, raising mortgage downpayments and imposing other curbs.
"Anti-inflation measures are being strengthened, real estate controls also will continue and we estimate that next year's real estate loan quota will be reduced by 20 percent," said an unnamed ICBC manager quoted by the newspaper.
It was unclear how developers would be affected by the lending moratorium because commercial borrowers know Chinese banks extend most of their loans early in the year and are ready for them to wind down credit in later months.
The banks involved are Industrial & Commercial Bank of China Ltd., Bank of China Ltd., China Construction Bank Ltd. and Agricultural Bank of China Ltd., according to China Real Estate Business.
The banks did not immediately response to requests by phone and fax for information on the status of their real estate lending.
China's economic growth has slowed from a stimulus-fueled peak early this year as Beijing tries to guide its expansion to a manageable level but inflation has risen steadily.
A double-digit jump in food prices pushed inflation to 4.4 percent in October — far above the government's 3 percent target. Price rises are limited so far to food but analysts warn that with stimulus money and bank lending coursing through the economy, Beijing faces pressure to keep inflation from spreading to other sectors.
The government reined in a surge in housing prices early this year by boosting minimum required downpayments and tightening lending controls. But the World Bank warned this month that prices are likely to face renewed pressure to rise.
Some analysts suggested Beijing's Oct. 19 real estate hike — its first since the financial crisis — was a warning to banks to cool credit after September lending soared above official targets.
October lending eased slightly but was only about 2 percent below September's level.
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