Beijing & Chinese Banks desperate to gain control of bubble

The Sydney Morning Herald has today reported some banks in China have raised interest rates on property loans by as much as 10 to 45% after a surge in credit growth this month. New loans issued to the 24 of January exceeded twice the amount that was loaned in December.

Meanwhile Beijing has launched its own control measures, increasing the deposit required on second and subsequent housing loan purchases to 60 percent, up from 50 percent, with interest rates on such loans to be at least 10 percent higher than the central banks benchmark lending rate.

All eyes are now on China’s central bank this weekend to see if they will raise the benchmark lending rate.

Premier Wen Jiabao told citizens in December that “I made a promise to the Chinese people last year that I would try to keep housing prices at a reasonable level during my tenure, and I won’t shrink from that goal,”

» Chinese banks hike rates by as much as 45% – The Sydney Morning Herald, 27th January 2011.

» China property shares suffer from latest policy moves – Market Watch, 26th January 2011.


  1. This is scary stuff. You have to wonder if they can get it under control, or will it bust in spectacular fashion. I get a gut felling that this will come tumbling down this year.

    Jim Chanos ( says China is one big construction site with 60% of its GDP construction and is simply not sustainable.

    If all that raw material is coming from Australia, boy will the tidal wave knock us out. I doubt the mining boom people will even see it coming.

  2. My bet is that they will get it under control. China is in much better position to deal with stuff like this than the U.S. Sure they may have an over-heated property market but they make everything now and the demand for cheap goods hasn’t stopped.

  3. I can’t afford a house. But I can afford a Plasma TV. Maybe I can build a house out of Plasma TV’s?

  4. @AverageBloke said “China is in much better position to deal with stuff like this”
    It doesnt look like they are in as much control as everyone thinks. There inflation is still going through the roof and everyone keeps buying property. Food prices are out of control.

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