A top Chinese official on Tuesday warned against what he described as "gray rhino" risks in the domestic real estate market and urged caution to prevent "potential disaster caused by the bursting of a bubble."
Pan Jiancheng, deputy director of the China Economic Monitoring and Analysis Center under the National Bureau of Statistics, made the remarks at a forum on asset management held in Hangzhou, East China's Zhejiang Province, the Securities Times reported
Expectations about China's housing prices have been fluctuating in recent months, and this is "mainly driven by investments or even market speculation rather than basic demand," Pan told the forum.
As the real estate market is heavily influenced by homebuyers' expectations, Chinese regulators need to remain vigilant about the risk of a bubble bursting because of investors' rapidly sliding expectations, Pan explained.
Pan's remarks on Tuesday followed similar warnings from other top officials about "gray rhino" risks, which generally refer to obvious major problems that have been ignored but that could lead to a systemic financial crisis.
In addition to housing bubbles, shadow banking, high leverage ratios at State-owned enterprises and hefty local government debts are also regarded as "gray rhino" problems, Wang Zhijun, an official with the Office of the Central Leading Group on Finance and Economic Affairs, said at a press briefing in July, noting China needs to address such issues to fend off systemic risks.