Having banks and local governments deleverage and trim overcapacity are part and parcel with central government efforts to maintain stable growth by nurturing the supply side of the economy. But even as this is happening, the housing market has been flooded with new loans in recent months, exposing the economy to new risks.
The central government has identified industrial overcapacity and excessive debts that banks and regional governments have racked up as two of five key problems it needs to address this year.
But many heavily indebted local governments rushed to roll out stimulus policies, such as discounts on home loans and lower down payment requirements so people can buy more homes, in a bid to address an oversupply of ho…
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