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Sheng Songcheng Suggests Cutting Interest Rates of Existing Mortgages Again; Real Estate Should be Guided to Soft Landing
Sheng Songcheng, Adjunct Professor of Economics and Finance at China Europe International Business School (CEIBS) and Head of Research Institute at China Chief Economist Forum (CCE...
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Sheng Songcheng Suggests Cutting Interest Rates of Existing Mortgages Again; Real Estate Should be Guided to Soft Landing
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Sheng Songcheng, Adjunct Professor of Economics and Finance at China Europe International Business School (CEIBS) and Head of Research Institute at China Chief Economist Forum (CCEF), told Caijing magazine that banks account for more than 90% of the financial sector, and policies by the People's Bank of China (PBOC) have to take banks into consideration. However, it is not to consider the interests of the banks, but to consider the risks of the banks, the survival of the banks, and the ability of the banks to continue to support the development of the real economy.

Sheng recommended that interest rates for existing mortgages be lowered again. If this is done, the interest saved can actually support consumption. However, he understood that it is very difficult to operate in practice, and that the wishes of commercial banks must be taken into account.

At present, Chinese property investment and property prices have not yet stabilised, and there are discussions in the market about whether mainland property would follow the "Japanese way" or the "American way". In this regard, Sheng said bluntly that China would not follow any of these 2 paths, citing his belief that the development of China was different from Japan and the US at their times, and that the resources squeezed out from the property market were being channelled into the development of new quality productive forces, modern manufacturing and advanced service industries. He believed that China is now in the throes of transformation from old to new momentum.

Sheng suggested that, on the one hand, more resources should be channelled to advanced manufacturing and modern service industries in terms of capital investment. On the other hand, the real estate industry should gradually be guided to a soft landing.

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