wu xiaoling : stepping up the study of the housing financing system and promoting the healthy development of housing finance in china speech by ms wu xiaoling, deputy governor of the people ’ s bank of china, at the international seminar on the housing financing system, beijing, 25 april 2006. * * * ladies and gentleman, good morning. i am happy to join you in such a warm spring season to discuss housing financing issues and provide explore policy options for development of housing financing system in china. here, on behalf of the people ’ s bank of china, i would like to express my warmest welcome and sincere appreciation to your presence at this important gathering. the seminar was part of the cooperation program between the pbc and the world bank to conduct a joint research on strategic issues concerning china ’ s housing finance. i hope through this seminar, we could learn from the successful experiences of other countries to design the framework and development targets of china ’ s housing financing system from a strategic point of view. here, i would like to stress three points. i. great attention should be paid to issues of real estate and real estate financing. maintaining price stability and promoting economic growth are the main policy targets of almost every central bank in the world. after 1980 ’ s, large fluctuations in the real estate market have drawn high attention of governments and central banks around the world. first, the real estate industry plays an important role in an economy and interacts with the commodity, service and factor markets as a pillar industry ; therefore it can significantly pull the growth of the gdp. the real estate industry has direct and indirect relations with some 57 industries according to estimation, and in 2001, contribution of the real estate industry to the gdp growth is around 1. 9 to 2. 5 percentage points. in 2005, investment in real estate development reached rmb1575. 9 billion yuan in china, accounting for 17. 78 percent of the total fixed assets investment and 8. 6 percent of the gdp. in the chinese economic transition, continued urbanization process and housing monetization will promote the development of real estate industry, so the real estate industry will be one of the important pillar industries for a long period of time in future. second, housing is related to people ’ s lives. a suitable house provides the basic living protection and a comfortable living environment that improves living quality, so housing policy and real estate industry development policy are important components of a moderately wealthy society and relevant to the realization of social development targets. according to

strategy. the long - term plan and strategy should be made in conjunction with the current development requirement of the housing market. we have already had some lessons in this regard. third, research should be based on concrete work. development plan and framework should be formulated considering actual market needs. currently, products innovation should be made a top priority to promote market development. in 2005, the pbc led the initiative of credit assets securitization on a pilot basis and launched mbs in the inter - bank market successfully. at the same time, commercial banks have made great efforts in self - initiated product innovation after the removal of the ceiling on interest rates of housing loans, and new products such as fixed rate housing loans were developed. generally speaking, great efforts should be further made in products innovation, especially financial products for the middle & low - income customers. i hope efforts could be made in strengthening research in housing financial products for different type of customers. additionally, efforts should be made not only to increase financing channels in the primary market, say reits and real estate development bonds, but also to develop secondary market tools. all in all, i hope we could jointly make efforts to promote the healthy development of the real estate market, financial stability, the improvement of living conditions of the people and the sustained and sound development of national economy. thank you.