Economy
Impact of property policies on China's economy
(China Daily)
Updated: 2010-07-22 10:24
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Tao Dong, chief Asia economist at Credit Suisse
China's policy has entered a waiting period and will not see further tightening. Most policies, however, cannot be loosened either. China's monetary policy, to some extent, depends on inflationary trends, which may become more serious after July due to rising labor costs and food prices. Any interest rate hike may be delayed till the fourth quarter.
Transactions in the real estate sector are slowing down, but prices have not seen major declines. This is the first stage of adjustment. In the fourth quarter, the real estate adjustment would enter a second stage in which the supply of new homes will surge while interest rates go up. Some developers may suffer from cash flow problems and home prices will drop together with transaction volume.