China prepares banks for a sharp reduction in property prices

08/4/2010 | Economist (free content), The · Bloomberg

China's banks were instructed to stress-test for a decline of as much as 60% in house prices, and it will be bad news for the world if a housing meltdown materializes, according to The Economist. The government likely would respond to a housing-market collapse with additional support for the export sector, the magazine notes. "If it does, it will siphon demand away from other economies," according to The Economist. "But if it doesn't, the housing hit to China's economy will be more severe, which will have much the same effect -- a reduction in the demand boost from China to the rest of the world."

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Economist (free content), The · Bloomberg

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