Media reports suggesting China is planning to relax its policy on second home mortgages are based on a misunderstanding, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), told China Business News yesterday.

The reports were triggered by Premier Wen Jiabao's work report to the National People's Congress (NPC) in which he said China would take measures to boost confidence in the real estate market.

One sentence in Wen's work report read "Purchasers of second homes can enjoy the same preferential policies that they enjoyed when they borrowed to buy a house for the first time."

News reports interpreted this to mean a loosening of policy on second home mortgages, causing real estate shares on the Shanghai Stock Market to soar by 3.35 percent.

But the media interpretation contradicted Liu Mingkang's statement at a State Council Information Office press conference last week. On February 26, Liu Mingkang said, "China will strictly implement its second home mortgage policy to guard against financial risks in the real estate market. China's mortgage policy is very different from the United States'."

Asked about the news that Bank of China (BOC) had terminated its strategic cooperation with Royal Bank of Scotland (RBS), Liu Mingkang said the five-year strategic objectives of BOC and RBS had already been achieved.

At present there are differing views on introducing new strategic investors. According to a source in the securities department, it is not necessary to offer further preferential policies, because many investors cannot offer genuine strategic cooperation, but only financial investment.

(China.org.cn March 6, 2009)