The China Banking Regulatory Commission is asking banks to report on risk exposure before the end of this month after saying mortgage risks are rising. Property-price gains spurred concerns that a record 9.59 trillion yuan ($1.4 trillion) of loans extended last year to combat the effects of the global financial crisis may be causing asset bubbles, according to Bloomberg News.
China's property prices surged by more than 12% in May, showing the government's efforts to rein in real estate prices and a prevent an asset bubble from forming may not be working. The Claymore/AlphaShares China Real Estate ETF (NYSE: TAO) has gained almost 3% in the past month, but the ETF is down almost 10% year-to-date.
China's government has gone so far as to raise reserve requirements for banks and has raised downpayment requirements for first- and second-time home buyers along with a ban on purchase of third homes.