China's State Owned Insurance Companies Ordered to Prop Up the Real Estate Market
Read more at China Bubble and China’s Shark Loan Ponzi Finance
In act of desperation, China’s Government has asked its state owned insurance companies to help save the real estate
China’s banks are technically bankrupt, and they survive only because everybody knows that the Chinese government (like every government in world) will try everything to save the banks. A collapse in the countries banking system will trigger a collapse of the regime as well.
If Ordinary Chinese will realize the risk and change their mind after a real estate bubble crash, a huge bank run will bring this “paper tiger” on its knees. The real estate market is the life line of the Chinese regime and its command economy.
The real estate market is hanging on the brink of collapse, and over extended banks can not expand lending at an accelerating pace since run away inflation will cause massive social unrest. So what is the next card up in their sleeve?
In August, a new insurance regulation was enacted to set the new upper limit for insurance investment in real estate to 5%.That can be read as a direct order from Beijing that now it is the insurance companies’s turn to save China’s construction based economic system
.Following the order, China life insurance announced that it will lend 10 billion to Chong Qing city to develop real estate for the poor. And many Chinese know: those so called public free rent houses are often occupied by the relatives of government officials, since the distribution procedure of public low rent houses is anything but transparent. In China, the rule of connection always is stronger then the rule of law.
China life insurance Company, Zhejiang branch won a 2.6 billion land auction to build another commercial office building in Hangzhou. That will add another vacant office building to the land of concrete and steel.
In the past, the government used banks and SOE’s in other industries to pump cheap credit indirectly into the real estate market. Now it has ordered insurance companies to keep the bubble float at the cost of the safety of the insurance of hundreds of millions of Chinese
Read the full stories HERE and HERE
Read the original story at Israel’s Financial Expert
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