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Some major state-owned banks in Shenzhen have tightened business loans to small and medium enterprises, mainland media 21st Century Business Herald reported, citing sources.

These banks have slowed approval for the loans that are backed by residential mortgages, and have basically stopped granting loans backed by shops, the sources said.

Earlier this year, Shenzhen offered interest subsidies for loans obtained by SMEs to help them ride out the pandemic. But such cheap loans were reported to be misused to buy property in the city, raising concerns of a real estate bubble. Many SME owners with cash flow problems tend to use their properties as collateral to obtain loans from banks, the report said.

China's real estate investment in January-September rose 5.6 percent from a year earlier, official data showed yesterday, accelerating from the 4.6 percent growth seen in the first eight months of the year.

Property sales by floor area dropped 1.8 percent in the first nine months from a year earlier, according to data from the National Bureau of Statistics, compared with a 3.3 percent decline in the first eight months of the year.

China's property market has recovered quickly from the coronavirus crisis, prompting local governments in some big cities to impose restrictions to contain potential bubbles. But some analysts expect a sustainable rebound would be less likely as consumer confidence remains soft and policy curbs remain in place.

New construction starts measured by floor area fell 3.4 percent in Jan-Sept from a year earlier, compared with a 3.6 percent drop in the first eight months of the year.

Source: https://www.thestandard.com.hk/section-news/section/2/223958/Shenzhen's-state-banks-turn-the-screws-on-SMEs