Economy

China may tighten rules for property trusts again

(Agencies)
Updated: 2011-04-25 15:07

China may further tighten control over property trusts as Beijing stays on high alert for risks in the country's booming housing market, the Beijing Times newspaper said on Monday.

Among new requirements, property developers may be ordered to set aside more cash before they sell their projects to investors via trusts, the newspaper said, citing unidentified industry sources.

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If implemented, these new requirements would make it even harder for property developers to get funding. As it is, China has cut bank lending to developers and restricted them from raising money in the stock market.

The China Banking Regulatory Commission, the banking watchdog, has clamped down on off-balance financing as well since the second half of last year, ordering banks to bring their off balance-sheet trust loans back onto their books.

Despite the crackdown, trusts have mushroomed to meet the demands of cash-thirsty developers.

In March alone, at least 35 property trusts were launched, totalling 9.8 billion yuan ($1.5 billion), double February's level, the Beijing Times said.