The new rules will soon be applied nationwide. The more people convert to homeownership, the more sinks, bathtubs, wallpaper and air conditioners the country's factories can sell. And having endured tight-fisted fiscal policies since 1993, local governments are now being told to spend, spend, spend. Shenzhen, China's perennial southern boomtown, has suffered one of the biggest shocks to exports of any Chinese city as a result of the Asian crisis. China is even encouraging private enterprise, rather than just tolerating it.
Most banks now have an officer dedicated to making small-business loans.
To encourage borrowing, lower domestic interest rates are also on the way, even though they tend to weaken the currency. That China can ease rates at a time when everyone is so worried about the yuan is a testament to how tightly it controls capital flows across its borders. The effort will mean fatter fiscal deficits and slimmer current-account surpluses, a painful prospect for China's conservative leaders. But many local governments are running budget surpluses, thanks to the divestiture of state-owned factories, and so have some cash on hand. Meanwhile, the economic benefits of devaluing the yuan aren't clear.