By Thomas Clouse
Old properties gain new protection from land appropriation
China's central bank in February raised the required proportion of deposits banks must hold in reserve for the second time this year. China is taking steps to rein in lending after the country's banks issued more than 9.6 trillion renminbi ($1.4 trillion) in new loans last year, more than double the total amount for 2008. Fourth-quarter GDP growth shot up to an annualized 10.7%, causing some fear that last year's lending spree, combined with government stimulus spending measures, could result in economic overheating and inflation. The consumer price index (CPI) rose by only 1.5% year-on-year in January, but producer prices increased by 4.3%. Real estate prices in 70 large and medium sized cities rose by 9.5%. Domestic media report that the Chinese banking regulator has asked banks to curb lending, though no official statement has been released. Bank lending in January slowed by 14% over the same month last year.
China threatened to cut military ties with the United States and impose sanctions on American defense companies after the US government decided to sell more than $6 billion in weaponry to Taiwan, which is governed independently but claimed by China as its own territory. The arms sale further complicates China-US relations, already strained by Internet censorship and currency valuation issues.
China may soon offer stronger legal protections for homeowners as policymakers attempt to address long-standing discontent over government land appropriation policies. Under new rules it would be much harder to demolish existing homes or for developers to force residents to move.