Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told reporters in a briefing Tuesday that he was concerned about what he called a “bubble” in Chinese real-estate prices, which he said could threaten the country’s financial sector and its broader economy, reported the Wall Street Journal.
“Many people buy homes not to live in, but to invest or speculate. This is very dangerous,” said Guo, comparing the property bubble to a “gray rhino”—an obvious but neglected threat.
Guo also warned about the possibility of spillover from what he described as asset bubbles in global financial markets, which he added were out of sync with real-world economic conditions. But Guo’s chief worry concerned the possibility of a steep drop in home prices in the world’s second-largest economy.
A precipitous fall, Guo said, could devastate home buyers and in turn threaten the financial and economic stability of banks, who wouldn’t be able to collect on mortgages, reported the WSJ.