The Chinese government is worried at the massive rise in property prices across all major cities. China has seen a massive 50% plus rise in property prices over the last one year due to increasing demand from millions of middle class consumers.
Now the Chinese government wants to avoid another bubble burst, and hence has decided to raise the interest rates by 50 basis points. The Chinese government has already asked the three main banks of the country to cut down on new loan issues in the coming months. All these are expected to result in further drop in demand for products and services inside China.
China cuts down bank lending