Easing could re-inflate China’s housing bubble
MONETARY relaxation could magnify China’s housing headache, with Beijing wanting a more active fiscal policy to support wobbling economic growth.
A crackdown on shadow banking had cooled speculation, but easing tends to find its way into real estate one way or another. A thicket of rules might slow, but not stop, capital from pouring back into a frothy market.
China’s property booms and busts tend to broadly track monetary conditions.
So the government’s call on July 23 for a more active fiscal stance – combined with indications the central bank might dial back its deleveraging drive – prompted speculation that another boom might be in the offing.