EconoChina

A blog on Chinese economy & society

To tighten or not to tighten, that is the question

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Despite soaring June exports, Chinese economy is heading south in the H2, so much so that some banks are quietly relaxing the ban on 3rd mortgages. The practice must be widespread enough to entice speculation that the tough crackdown on property market since April will be loosened up and lifting the share prices of the battered property companies. Naturally, a spokesperson from the China Banking Regulatory Commission came out denying all these as groundless speculation and insisted that the government will continue in its tightening efforts.

But China is at a crossroad, with exports expected to dip in July, there is concern that continuing the tightening measures might knock the air out of the economy. However, the government is also under severe political pressure to “do something” about the runaway property prices which are way above what ordinary Chinese can afford. Relaxing the efforts will be seen as giving in to the rich and powerful, not to mention that further blowing asset bubble is hazardous to China’s long term economic health.

Yes, China is definitely between a rock and a hard place now.

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Written by Cindy Luk

July 12, 2010 at 11:22 pm

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