China advisers urge government to relax property curbs

BEIJING: China's top advisory body called on the government to relax property market restrictions to keep the economy growing, a newspaper said, the first such proposal by advisers to steady a weakening house market.

The China Daily cited the Chinese People Political Consultative Conference (CPPCC), an advisory body for parliament, as saying Beijing should loosen purchase restrictions for luxury homes in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen.

“Restrictions on purchases should be relaxed for high-end residential properties in first-tier cities,” the newspaper cited the proposal as saying. The paper did not say how it obtained the proposal, saying only that it was released on Tuesday.

This is the first time a group of influential economic advisers have called on China to relax controls on the property market, a once redhot sector that has cooled under a government campaign to make home prices more affordable.

It follows rampant market talk that China could soften its grip on the house market by allowing bigger discounts on mortgage rates, which the government has vehemently denied, saying instead it needs to persevere with price controls.

Premier Wen Jiabao has been adamant that the government will not relax its grip on the housing market even as he has called for other measures to support economic growth.

Analysts said China was unlikely to heed the suggestion as home prices were still too high, but the proposal underlined worries that China's economy could sink into a deeper downturn if the property market was suppressed for too long.

“I don't think the proposal on relaxing restrictions on home purchases will be accepted by the central government since it is in contrast to Beijing's tightening stance,” said Li Wei, economist from Standard Charted Bank in Shanghai.

Growth in the world's second biggest economy slumped to a three-year low of 8.1% in the first quarter as Europe's debt crisis sapped export growth. Analysts forecast growth to slacken further to 7.9% between April and June.

The CPPCC, which includes retired or soon-to-be retired officials, meets in parallel to China's parliament and has no decision-making powers. But it has in the past floated ideas that subsequently became law.

By Reuters