June 27, 2012
Translated by Tang Xiangyang

An authoritative but unnamed source from Henan's Banking Regulatory Commission has denied reports that the province has loosened bank lending standards and other property-related policies, dismissing them as nothing more than rumor.

Media reports said banks in Henan, a province in central China, were encouraged to offer a 30 percent discount on the benchmark lending rate for first home buyers, in a move aimed at boosting the local property market.

A finance official in Zhengzhou also denied that such a policy had been released.

On June 26, media outlets, including the Wall Street Journal, citing an official notice that had been posted to the website of Henan's provincial government, reported that Henan had "fine-tuned" policies related to the property market.

Aside from offering a 30 percent discount for first home buyers, the policy changes were also said to have involved official encouragement for local banks to offer loans to developers who were constructing small- or medium-sized apartment projects or low- and medium-cost housing projects.

Today's 21st Century Business Herald quotes an unnamed source as saying that local-level banking regulatory commissions had received such a notice around two weeks ago. However, the source went on to say that the notice was later cancelled before it was officially implemented.

The 21st Century Business Herald report also says that both housing prices and transactions in Henan have fallen over the past four months. Though the property market picked up in May, a looser regulatory environment would likely help buoy the property market and thus help stimulate the local economy.

Publicly available data shows that fixed-asset investment growth in Henan over the first 5 months of 2012, dropped by 5.9 percentage points when compared to the same period last year.

The apparent turn around in policy, is a signal that the central government is still willing to pull local governments into line if they attempt to find ways around the property market restrictions that have been pushed from Beijing.

Links and Sources
21st Century Business Herald: 河南房贷折扣新政还未正式执行就被撤销