Why a Chinese official's idea to support the property sector could be good news for Australia's iron ore miners

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The Chinese economy is slowing.

With the 7% official growth target for 2015 already looking shaky, policymakers in Beijing are worried enough to reverse many of the structural barriers erected in recent years to slow rampant property speculation.

Last week we saw the release of new rules making it easier for investors to buy a second and subsequent home and the PBOC has over recent months eased interest rates and the Reserve ratio’s Banks have to hold.

That means that money is now both more plentiful and cheaper.

But an official at the Ministry of Housing and Urban, Rural Construction wants the government to go further and establish a bank to explicitly target support for the housing sector.

Reuters reports that Zhang Qiguang, head of the Ministry’s housing provident fund supervision department, called for the use of US$597.4 billion in housing provident funds to “offer low interest rate housing loans to help middle and low income home buyers, bolstering demand in a sluggish real estate market, and reducing risks for commercial banks.”

Source: Westpac

Chinese construction is the most intensive user of steel, and by extension, iron ore, so Australia’s miners will be watching closely for any resurgence in housing.

Zhang’s idea is not official policy yet. But, the fact that the paper has been made public yesterday, via Xinhua, suggests Beijing is taking both it and the economic slowdown seriously.

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