China's State Council, the cabinet, ordered local governments on Sunday to better manage investment agencies amid concern that their borrowings, estimated at hundreds of billions of yuan, could cause problems for Chinese banks.
China's new yuan-dominated lending in May shrank to 639.4 billion yuan ($93.6 billion) from 774 billion yuan in April, the People's Bank of China, the central bank, said in a statement Friday.
Commercial banks in Beijing took a further step in tightening home mortgage loans and stopped lending to third-home purchasers, the Beijing Times reported Friday.
The average monthly new loan volume is expected to be 600 billion yuan in May and June, to keep the total new loan amount at 2 trillion yuan for the second quarter, the Shanghai Securities News reported Friday.
Commercial banks can afford up to a 50 percent plunge in housing prices, the Shanghai Securities News reported Friday.
Most commercial banks can endure at most a decline of 40 percent in housing prices, according to a round of stress tests on real estate loans initiated in late April, the 21st Century Business Herald reported Tuesday.
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Despite government calls to tighten mortgage loans, fresh lending in April is likely to pick up from March, leading to a steady growth in credit in the second quarter, analysts said on Friday.
China's biggest developers are borrowing record amounts in Hong Kong, taking advantage of lower interest rates to circumvent a lending crackdown at home.
While joint-equity banks struggle in tight boxes, State-owned commercial banks still enjoy strong lending ability, National Business Daily reported today.
China could raise interest rates after the release of the second-quarter economic data in mid-July, economists said, if statistics show inflation rising strongly despite Sunday's move to mop up liquidity.
Although financial authorities have stepped up efforts to prevent real estate bubbles, Taiwan's bank loans to property developers are still on the rise, partly fueling the sky-rocketing property prices, analysts said Wednesday.
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