After Beijing, regulators in Shenzhen and Jiangsu has also started to checkconsumption lending flowing to property market, local media reported. In earlySeptember, banking and housing regulators in Beijing issued notice to checkillegal fund use of consumer loans for house purchase, requiring local bankinginstitutions and property agencies to self-check down payment loans via retailconsumption and operational lending. A key self-check focus is thoseconsumption loans with loan size over Rmb200k. One case in the report said ahome buyer in August applied a Rmb300k consumption loan from bank andalso borrowed from property agent in order to pay for the down payment for asecond hand apartment.    (DB view) Previously the banking and housing regulators in Beijing havereportedly started to check illegal fund use of consumer loans for housepurchase, requiring local banking institutions and property agencies to selfcheckdown payment loans via retail consumption and operational lending. Wesaw strong growth in China’s short-term consumption loans in the past 3-4months, with balance up 34-35% yoy to make up close to 9-10% of all net newcredit provision in China. Particularly new credit card loan in 2Q17 amountedto Rmb420bn, contributing 81% of incremental short-term consumption loans.    However, we are not entirely sure that the banks maintained strictunderwriting standards and monitored the uses of funds properly. It is verydifficult to assess how much of personal loans were flowing into propertymarket. But we note in the past months, CBRC has imposed fines on somebanks regarding lending to unqualified borrowers and lack of proper postlendingmonitor. We think those banks with loosened underwriting standardmay face tighter regulatory pressure going forward. Please refer to our report:China’s consumer debt boom and China's credit card boom?

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