There are rumours that China’s 4 largest state banks will not be issuing any new loans to property developers for the last month and a half of 2010.
I’ve also heard that they have not actually approved any new loans since the end of October as they had already met their allotted annual targets.
The 4 banks involved are:
Industrial and Commercial Bank of China
China Construction Bank
Bank of China
Agricultural Bank of China
The authorities are walking a tight rope. As I’ve written before, when central banks wage a war their decisions tend to fall into two phases. First comes a long line of decisions that have no impact (in the case of Chinese real estate this cycle we have a line of RRR increases, and loan curbs… yet prices are still heading North), and then come one or two decisions with a major impact (most often disastrous) with a more pronounced outcome than intended. It’s like a dam breaking: gradual or slight change is almost impossible. When it comes to reigning in Chinese real estate, we are still in phase 1 – but gird yourself… you don’t want to be caught holding the hot potato!