In China, Steps to Ease Mortgages as Real Estate Loses Its Sizzle

Source: New York Times

SHENZHEN, China — China’s real estate bubble has lost its fizz in many cities, complicating the government’s effort to manage an economic slowdown here.

The pain is obvious in Liu Shirong’s apartment development. Mr. Liu, a shy electrical engineer, doesn’t mind living in a complex where only 50 of 780 apartments are occupied and the swimming pool is eternally empty. “I have peace and quiet at night,” he said.

But the vacant apartments are a nightmare for the mainly speculative investors who bought them a year ago. And nearby, only one of the two dozen towering cranes was still in operation on a recent afternoon.

Banking experts and economists expect this to produce a surge in loan defaults for Chinese banks by next spring or summer that will erode the high profits banks have been earning in the last three years although few banks seem likely to fail. But the effects of the bust could extend far beyond banking, complicating economic policy-making.



Read more: http://www.nytimes.com/2008/10/24/business/worldbusiness/24chinabank.html?em