Chinese official warns of financial bubble risks

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China’s financial sector faces bubble risks, a government official warned on Thursday and said a property tax may be on the cards in the near future as authorities extended their efforts to reduce a worrisome build-up of debt in the economy.

The ratio of China’s financial sector to the overall economy “is the highest ratio in the world,” said Huang Qifan, deputy chairman of the economic and finance committee under the National People’s Congress.

“This is not a good thing,” Huang told a finance forum.

China’s financial sector as a share of gross domestic product was 8.5 percent in the first nine months of this year.

Huang explains the underlying risks and the future adjustments to be made in the Chinese economy at a forum in Beijing on Thursday./ CGTN Photo.‍

Globally, asset prices are also at historically high levels due to unconventional loose monetary policies adopted by major central banks, Yin Ying, vice governor of the People’s Bank of China, said at the forum.

“There is a possibility of a relatively big adjustment in the future,” he warned.

China has been keeping a wary eye on speculative financing and has taken a hard line against risky, shadow banking activities.

Huang, who was former mayor of Chongqing and is considered a leading financial expert in China, also suggested that a property tax, a plan that has all but stalled since two pilot programs were launched more than five years ago, is on the cards in the next few years.

The new levy would help temper speculation in a sector that has drawn a raft of government curbs in the past year.

“I believe (a property tax) will happen in the near future, not take 10 to 20 years. It could happen in the next several years,” he said.

Source(s): Reuters