China’s property market could be on track for greater risks and more bad debts, according to the latest annual report by Chinese state-owned asset company China Orient Asset Management Co.
The survey, which gauges the views of 391 representatives from commercial banks and securities firms, said heavy financing restrictions in line with Beijing’s tough stance on leverage could lead to a rise in loan defaults as a percentage of debt in the sector.
The findings echo remarks made by the deputy director of the State Council Development Research Center, Wang Yiming, on Wednesday. He said tightened credit access has increased “market distortions” in the troubled property sector, Bloomberg reports.
A property price fall of 20% or more will place significant pressure on Chinese banks, said over half of the survey’s respondents.