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China’s easy money policy risks property bubble – PBOC’s Adviser Bai

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 3, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    In an interview reported by Bloomberg, PBOC Adviser Bai Chongen noted that the easy money policy adopted by China has inflated real estate prices and increased the risk of a property bubble.

    Bai is one of three outside academic advisers on the PBOC’s 15-member monetary policy committee led by Governor Zhou Xiaochuan.

    Key Quotes:

    I can’t say whether there are bubbles right now, but we’re worried about such a problem

    Government goals to cut oversupply in smaller cities and controlling the bubble in bigger ones are contradictory

    Interest rates have gone down a lot, and it would certainly boost asset prices in tier-one cities, but that doesn’t help tier-three or four cities with their overly high inventories

    There won’t be new investment in tier 3 and 4 cities, and there shouldn’t be any new investment -- there’s already so much in inventory.
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