"This article is not a recent one, but in my view interesting in the attempt of explaining the workings in the Chinese government, the learning curve from previous mistakes and above all, the difficulty to implement central government regulation at local level"

Eoin Treacy's view Thank your for this edition of the China Leadership Monitor which I'm sure will be of interest to other subscribers. Here is section:

Second, the banks have substantial exposure to the housing market, exposure that has increased dramatically over the past 16 months. Mortgage lending and loans to developers were two of the biggest components of the massive credit expansion of 2009. Today, banks in China are undergoing massive "stress-testing," like that which the Federal Reserve Board put the biggest U.S. banks through in early 2009. Bank branches are being pressed to compile more detailed and accurate information, and staff at the bank regulatory agency are analyzing the data. There are about 9 trillion RMB in loans directly to the real estate sector from the banking system, as of the end of March 2010. Thus far, analysts judge that a 20 percent decline in housing prices would be manageable for most institutions. Beyond that, it is less certain. In general, Chinese banks are being pressed by the regulator to raise capital and set aside larger provisions for loan losses.

The Chinese banking sector remains the largest weighting in the CSI300 and has contributed to that Index's underperformance this year. It found support earlier this month following the Agriculture Bank IPO and appears capable of at least rallying to test the progression of lower rally highs and the still declining 200-day MA. A sustained move above 4000 would be required to indicate that demand has regained the upper hand beyond the short-term.