Categorized | International

China’s Main Banks Will Ease Lending Restrictions

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Four of China’s main banks have announced a decision that could trigger serious repercussions from the Chinese government. Just days after the Chinese government announced that it would not be easing any of the imposed property restrictions; the nation’s banks did just that. The four primary banks, which include Industrial and Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, and Agricultural Bank of China Ltd, all announced that they would be reducing or eliminating lending restrictions.

 

The easing of restrictions includes charging lower rates to developers and first-time homebuyers. Certainly the banks have been feeling the adverse effects of declining business that came about as a result of the restrictions. As such, they had no choice, but to take action in addressing the current lending situation.

 

Many economists believe that the action by the banks could help the residential real estate market in China rebound in strong fashion, as it will give buyers and developers drive a wave of growth in the second and third-tier cities of China.

 

Residential property prices have fallen for nearly a year straight, causing many developers to go out of business. The action also prompted some banks to close up shop on their lending division.

 

It has yet to be seen just how China’s government will react to this rogue action taken by four of the country’s largest banks. Some believe that the action may incite a financial civil war of sorts between the government and the banking system, particularly due to the most recent sequence of events.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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