Print This Page Email This Page
Halt the Economy's Overdependence on Real Estate

Economic growth should not be overly dependent on the property sector, warned a report from the Chinese Academy of Social Science (CASS).

The report followed the CASS's investigation into the US subprime mortgage crisis in June. It pointed out that the government should rethink the development of the real estate sector, and clarify their role in the market.

Local governments used to bank on the real estate sector for economic growth and land transfer fees were regarded as the main source of local fiscal income.

Statistics from the National Bureau of Statistics show that investment in the real estate sector last year reached 2.53 trillion yuan (US$370.13 billion), contributing 10.25 percent to the country's GDP.

But the government's over dependence on the real estate sector may twist the driving force of the economy, raise factor costs at a bad time and weaken the integral competitiveness of the economy. Worse still, it may trigger social disputes.

Redesigning the financial system that caters for the real estate market is also urged in the report, so as to curb the housing bubble and banking risks.

It said that commercial banks should control loan quality to offset the adverse impact of the fluctuation of the real estate market and developers should be encouraged to raise funds in the capital market.

The report suggested that the government reform the housing fund management system and establish housing mortgage banks and companies dealing in securities to back housing mortgages. However, it said the government should be cautious in designing such a financial system, especially with financial derivatives, to avoid risks from one sector spreading to the overall market.

House renting market should be set for the lower-income group measured by a credit rating, advised the report.

(China Daily September 26, 2008)

Related Stories
- Premier Wen: Economy to Stay the Course
- Lending Rate Cut Likely to Boost Property
- Property Sales in China Continue Decline
- ADB: China Economy to Remain Moderately Strong for 2008-2009
- Chinese Economy Not in Downturn, but Adjustments Needed

Print This Page Email This Page
President Celebrates Successful Shenzhou-7 Launch
China's 3rd Manned Craft Successfully Launched
China Most 'Attractive' Destination for FDI
China Urged to Cultivate Research, Talent
Official: China Likely to Realize All Anti-poverty Goals by 2015
Chinese, German Education Experts Discuss Cooperation

Product Directory
China Search
Country Search
Hot Buys