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

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