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REPEAT: MNI:China Not Seen Stimulating Property Mkt for Growth

MNI (London)
Repeats Story Initially Transmitted at 09:55 GMT Aug 1/05:55 EST Aug 1
--Following Politburo Comments, Analysts See Continuation Of Sector Constraints
By Iris Ouyang
     BEIJING (MNI) - China is seen refraining from stimulating its property
market to boost economic growth this year, as concerns over financial risks
outweigh trade war concerns, leading analysts said.
     The Politburo stressed that China should be determined in tackling problems
in the property market and "firmly curb the rise of housing price."
     The policymakers indicated that "the chance for loosening property controls
to offset pressure of an economic downturn is not big," China Industrial Bank
Research said in a report, downplaying forecasts that China could stimulate the
property market as it did after the 2017-2018 financial crisis, which then
triggered a property bubble.
     Concerns that recent liquidity injections into the interbank market could
fuel rapid housing price gains now appear unfounded following the Politburo
meeting, said Xu Hongcai, deputy chief economist at the China Center for
International Economic Exchanges, an advisory group run by the National
Development and Reform Commission.
     "The monetary supply is slightly reduced," Xu said in a report. "The
property market is an important segment supporting and stabilizing economy, the
government needs to curb housing price growth while preventing property
investment and housing consumption from dropping significantly."
     --STRICTER TONE
     "The tone of 'firmly curb the rise of housing prices' is stricter than any
mentioned by policymakers to date," Yang Hongxu, deputy head of the E-house Real
Estate Research Institute, said in a note to MNI.
     Yang, who has observed China's property market for several decades, said
the last time the government mentioned such a policy direction was last year,
when it said "we should curb too fast growth of housing prices in hotspot
cities."
     Analysts widely see the first appearance of "make determinations" in
property policy in a Politburo meeting as indicating the government will not
loosen property controls in the short term, even amid headwinds from a trade
standoff with the U.S.
     Though stability was stressed about 20 times in the Politburo statement and
the Chinese government is increasingly taking a pro-growth stance, the
communique said the property sector will need to stick to the current tight
controls tailored to each city, improve the balance of demand and supply and
reasonably guide market expectation.
     --STRUCTURAL CHANGES
     The Politburo also said the government will increase measures to clamp down
on illegal market behaviour, whilst speeding up action to facilitate stable and
sustainable growth in the sector -- such as advancing China's rental housing
market.
     These moves suggest the government is still concerned about bubbles in the
property market that could undermine the financial sector, even risk triggering
a systemic financial crisis.
     Their concerns appear legitimate, as the property market has picked up in
the past months, with average month-on-month price growth of the major 70 cities
accelerated for four straight months, reaching a two-year high in June of 1.1%.
     Based on the Politburo's tone on property regulation, China is unlikely to
implement a broad-based loosening of monetary policy, with a targeted loosening
seen as more likely.
     Property stocks fell sharply in China Wednesday, with leading companies
recording falls of around 7%. The Shanghai Composite Index fell 1.8%, largely
pressured by the slide in property stocks.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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