China Quarterly Update, January 2008
Updated: 2008-02-18 11:00
Other fiscal and structural policies—key for rebalancing
During the last six months, many fiscal and structural policy initiatives have been taken. Other highlights include:
State-owned enterprises will pay dividend to Government from 2008.
Some progress has been made in reducing the energy intensity and emission.
The government cracks down on environmental violators.
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FINANCIAL AND CORPORATE SECTOR POLICIES AND DEVELOPMENTS
Capital market developments
China’s stock market saw another year of fast growth in 2007.
Major reforms in the law enforcement in the equity market were implemented.
Capital markets opened up further to foreign participation.
The first corporate bonds were launched under new, simplified rules.
SME Finance
Several efforts have been made to improve access to finance by SMEs through the capital markets in 2007.
Discussion is going on about a new board for high growth enterprises.
Housing Finance
China’s government has stepped up its efforts to meet the demand for affordable housing from lower and middle income households in cities.
There are several obstacles to develop appropriate products for this group of borrowers:
1.A lack of effective credit information system for the lenders to track the credit history of borrowers.
2. The property registration system in China is not a national system, making it difficult for lenders to verify the housing status of the borrowers.
3. There are no effective mortgage insurers in the market to share the risks with mortgage lenders to reduce the down payment and provide the necessary insurance coverage for defaults, which will help the lower and middle income households to buy their houses earlier.
