Cautious China banks could undermine Beijing's property stimulus efforts

As stock market investors cheer Beijing's latest bid to boost the country's ailing housing sector, Chinese bankers are gritting their teeth over the risks they face in further relaxing lending rules to home buyers. Alarmed by persistent weakness in the property market and its increasing drag on the economy, policymakers said on Monday they were cutting downpayments levels for the second time in six months and offering bigger tax breaks. The hope is that by allowing buyers to get mortgages more easily, China can revive the housing market, which accounts for 15 percent of its economy, and where prices are falling at a record pace. "The difficulty for us now is that the deposit has gone down, which increases the risks for us," said a loan officer at one of China's four biggest banks.

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