China tightens credit control on property projects

The People's Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC) are urging rigorous credit management on commercial property projects to curb possible risks that could threaten the banking sector.

Analysts said the policy aimed at improving the property credit market with the central bank's resolution and devotion to implement the tight economic policy and the banking regulator's prevention against possible financial risk.

The policy would have significant impact on property developers as financing would be more difficult.

According to the joint-circular issued late on Wednesday evening, no loan would be given to developers to cover land transfer costs. Loans for land reserve acquisition would be secured by property developers through the use of a mortgage and require a legal land use certificate. The amount of the loan should be less than 70 percent of the estimated value of the project. The credit period would be confined to two years.

Chinese spend big on real estate

SHANGHAI, China (AP) -- China's National Statistics Bureau has reported that spending on real estate and other fixed urban assets rose 27.3 percent in the first seven months of the year compared with the same period a year ago, accelerating amid reconstruction of areas devastated by May's earthquake.

The bureau's report Friday says investment in construction, factory equipment and other such assets totaled 7.2 trillion yuan (US$1.1 trillion) in January-July.

The growth rate was above the 26.8 percent rise in such spending in the first half of the year.

Construction spending also increased amid efforts to rebuild following the May earthquake that killed nearly 70,000 people and left 5 million homeless.