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Home buyers may get extra help
Last Updated(Beijing Time):2008-10-07 14:18

China may use targeted measures and interest-rate cuts to revive a sagging property market and sustain economic growth, Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co in Hong Kong, said yesterday.

"Expectations are building for the government to introduce policies supporting lower-income home buyers and a selective easing of credit for some developers," Ulrich told Bloomberg News.

Policy makers are trying to prevent a sharper slowdown in the world's fourth-biggest economy as the credit crisis undermines demand in export markets. China can't afford a housing-market slump because the property sector accounts for a quarter of fixed-asset investment and 10 percent of employment, Ulrich said.

House prices in China's 70 major cities fell 0.1 percent in August from July. Morgan Stanley analysts warned last month the sector could be heading for a "meltdown."

"As the property market's woes spill over into other areas of the economy, we expect the government to selectively loosen restrictions on the sector," Ulrich said. "Specific measures to boost the property sector may be necessary to forestall a sharper slowdown in the broad economy."

The steel industry relies on construction work. Steel-company shares tumbled yesterday after the China Securities Journal reported that some steel makers would cut output by 20 percent this month as demand cools.

Baoshan Iron & Steel Co Ltd fell 8.8 percent and Angang Steel Co declined 10 percent. The broad market gauge, the CSI 300 Index, closed down 5.1 percent.

Ulrich said measures to support the property sector included lowering interest rates and bank reserve requirements, reducing down-payment requirements, and allowing more bond sales to finance property developers. The government could also reduce or eliminate land appreciation tax, she said.

Source:Shanghai Daily 
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