Financial Regulation and Supervision in China. Grappling with the Ups and Downs of the Property Market
Sebastian Guo and Peter Knaack | 12 March 2024
Monetary, Policy Briefs | Tags: China, Financial Supervision, Housing
China’s financial supervisors have employed a unique set of tools to address financial risk emanating from a key sector of the economy: real estate. This policy brief provides an in-depth description of the prudential supervisory instruments they have used to lean against the boom-and-bust phases of a credit cycle centered around the real estate market in recent years. After outlining the economic and policy context that shapes China’s real estate development, the brief analyzes the supervisory toolkit and identifies features that are unique, such as measures targeting non-financial companies, joint rule-making with other government organs, and the use of informal instructions to financial institutions (so-called window guidance). It lays out the sequence of measures taken from 2017 to 2023, a period that can be divided into a restrictive phase and a phase of targeted easing. This analysis is intended to inform, with detail and clarity, the prudential supervisory community, financial experts in China and around the world, and anyone keen to understand the scope of the toolbox supervisors can wield in pursuit of a complex set of economic policy objectives.
Read the full publication Financial Regulation and Supervision in China. Grappling with the Ups and Downs of the Property Market
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