采访/陈汉 编辑/田净 后制/王明宇
China’s Second and Third Tier Cities Cease Mortgage Loans: Are Money Shortages Worsening?
Since June this year, money shortages
have occurred in Chinese banks.
News has repeatedly indicated that banks in
certain cities had stopped mortgage services.
Recently, four banks in Shenzhen announced
they would no longer provide mortgage loans.
Several state-owned banks and banks in second
and third tier cities also made the same decision.
Analysts said that money shortages
are spreading to the local banks.
On September 10, China Real Estate Business reported
that four banks in Shenzhen stopped mortgage services.
On September 9, Chongqing Economic Times
reported that several banks in Chongqing have
stopped offering mortgages to second hand
home buyers due to tightening credit limits.
On the same day, anhuinews.com claimed
that four banks in Hefei had stopped
mortgage loan from second home buyers.
State-owned banks, including Agriculture Bank,
Bank of Communications, and Industrial &
Commercial Bank, have made the same move.
It has been reported that this
phenomenon will likely continue.
Xie Tian, Professor at the University
of South Carolina Aiken Business School:
“We saw money shortages one month ago.
In fact, it is the state-owned central banks
and major banks that were short of money.
The Chinese regime had to inject several hundred
billions Yuan to temporarily solve the problem.
Now money shortages have spread
to local banks. It is indeed spreading.”
Sources said that since the money shortages
occurred, some banks began to limit mortgage loans.
They have stopped second-hand home loan services.
If the banks hadn’t stopped second-hand loan
services, it would increased their interest rates.
At the end of August, banks in Beijing cancelled
discount deals on interest rates for mortgages.
Instead, some banks increased
20% on the standard interest rate.
China’s National Business Daily has reported that many
banks have ceased mortgage services in Guangzhou.
They have run out credit.
Jie Sen, NTD special economic commentator,
said that in second and third tier cities, mortgage
loans have slowed down and have stagnated.
It is the CCP’s measures to protect the banking system.
Jie Sen: “The CCP realized its failure
of it’s measures on real estate control.
Instead, the housing bubble has grown larger.
Properties are always demanded in first-tier cities,
yet risks in second and third tier cities are increasing.
In order to protect the banking system, they need to
control credit limits, which is a method of self-protection.”
According to ftchinese.com on September 6, China’s
Central Banks injected several hundreds billion Yuan.
This was via non-public reverse repo agreements
into the banking system in June and July.
These funds are due in the near future.
Xie Tian believes that the authorities adjusting policies
didn’t completely solve the problem of money shortages.
Maybe the new leadership does not really want to
take the economic burden from the previous regime.
Thus, Li Keqiang deliberately let the money
shortage break out, to get rid of the burden.
Recently, Li Ka-shing, Asia’s richest person,
has been pulling his property out of China.
On September 3, Bank of American sold
two billion H-shares of China Construction
Bank for over HK$11.7 billion (US$1.47 billion).
Soon, other foreign banks sold all their shares
in China’s four major state-owned banks.
Does the foreign investors’ exit from China have
a link to the Chinese banks money shortages?
Xie Tian: “The two don’t have any direct links.
It is because state-owned banks
internally are tight on cash.
Foreign investors are not optimistic about China,
and in addition, the Chinese economy is declining.
Thus, it is not directly linked with money shortages,
but both certainly have influenced each other.”
Xie Tian said that foreign investors’ leaving would
undermine the CCP’s and investors’ confidence.
It could trigger housing and stock market bubbles to burst.