China is retreating from a policy that has channelled about $1tn in subsidies to homebuyers since 2016, a reversal that has sent tremors through the residential property market amid broader concerns about a housing bubble.
Mainland property shares have tumbled since an executive from China Development Bank said in a teleconference hosted by a big investment bank this month that CDB was tightening loan approvals for the subsidy programme. CDB, the state-owned policy bank with $2.4tn in assets, is the main source of loans for China’s slum redevelopment policy, which began as a lending programme to support urban renewal but evolved into cash payments for displaced residents.
CDB said that the unnamed executive’s statements “did not represent the bank”, but experts say that the “slum redevelopment” policy was contributing to rapid rises in home prices and needed to be overhauled.