real estate industry is a typical capital-intensive industries, and financial closely linked. Recently, the General Office of the State Council transmitted the Ministry of Construction and nine departments "on the adjustment of housing prices stable housing supply structure views," reporters interviewed on issues related to the State Council Development Research Center financial Deputy Director of the Institute for, tutor of doctoral students Bashusong professors.

Reporter : Last year's Boao Forum, real estate, what do you think the real estate industry in China is the key financial change. Now you have anything to change this view? Indeed domestic developers in the past two years has made great progress on the financing channels, developers might also determine funding does not seem to be too many problems.

Bashusong : real estate is a typical capital-intensive enterprise, industry and the general financing of a significant difference, we have often said that the greatest factor in the real estate industry is the most important : location, location, location. Indeed, from the real estate market regulation in recent years shows that the most important factor into relationships : funds of funds. The real estate industry not consider financial issues, which is the initial stage of industry specific period of the product. It can be said that in a long period, change the Chinese real estate industry, a key factor in the financial, this view, I think that will continue for some time.

real estate industry financial innovations, developers are not limited to domestic financing innovation. In fact, real estate developers from the financing situation, the statistics from the People's Bank calibre of view, bank loans in the real estate financing throughout the proportion has fallen to around the international average fluctuations, which is a big step forward, one could say that macro-control to guide them. However, the developers are also large differences in the status of funds, sources of funds, of course, takes a large number of listed companies, but many small and medium-sized real estate enterprises still very tense funds, the recent introduction of a number of regulatory policy gradually, one of the main thread of funds.

Reporter : 2006, the domestic stock market is in a prosperous, it was said that the stock market will now focus on decentralized funds dropped in the real estate industry. What do you think? If a triage, this understanding should be based on what kind of phenomenon judgement.

Bashusong : the real estate and stock market comparison, because both the asset markets, both between the wave either rise alternative relations, such as a market funds from one market to another, but also to promote mutual relations, because both assets spread in mobility, the expected appreciation of the renminbi has assets have appreciated trends. The real estate market and stock market liquidity, who depend on these two relations dominated. The Hong Kong market is the real estate market and stock market interaction models in the market, real estate companies once dominated, the performance of real estate companies to the stock prices rise, the wealth effect from stock market has affected the real estate market, but later as the Hong Kong listed company structure improvement Mainland manufacturing and resource categories listed companies increased, the situation will gradually change. In this interaction, but also pay special attention to preventing the economic bubble.

from basic view is that the market depends on two cost comparison between the earnings risk. Strong regional real estate market is hot, we can only say that in some cities, the real estate market has been lower than the overall rate of the stock market, but there are some cities, real estate integrated yield is higher than the stock market.

Reporter : new round of macro-control measures have been introduced to the specific, the issue has been discussed more Shoufu a shocking but it seems more reasonable results. Discriminating between different structures and different geographical serve as a good signal, you evaluate this?

Bashusong : Shoufu from micro-banks operate on different levels is the credit status of customers, different types of projects carried out by a risk identification, credit conditions poor, high-risk projects, Shoufu should be higher in order to avoid banks to reimbursement risks. The significance of this policy at the macro level, because now most of the consumers purchase through bank loans, the increase will be moderate increase Shoufu purchase threshold, particularly for the second set of housing threshold. The actual implementation of this policy more important. Because banks are often able to purchase second housing loans, often repayment capacity is relatively strong, relatively low credit risk, the risk to banks in terms of pricing can be lower, but this is subordinated to the need to consider the needs of real estate regulation.

Reporter : 2,006 real estate of the greatest challenges facing the financial sector should be?

Bashusong : not only real estate finance, the financial industry is facing the problem of excess liquidity in the excess liquidity of the financial environment, while under control of the need to curb excessive price increases, the other hand excess liquidity need to find channels to absorb. in the real estate market absorption requires the opening of new channels, the bond market development, multi-level development of the capital market is necessary to introduce funds for the promotion of economic growth to more positive areas. Real estate finance itself can innovation, for example through the form of REITs, real estate investment as a function of assets separated, attracting some mobility.

Excerpted from the "China-Daily" 2006.06.12 reporter Liu month