THE last time Beijing turned the screws on property investment, the world woke up to find China's heavy industry sector had been flattened and the resources boom had turned to bust. Rio Tinto jumped into the arms of Chinalco, banks pulled the rug from under Oz Minerals and the Reserve Bank slashed interest rates by 4 percentage points in a little over five months.
No surprise, then, that global investors are fretting about the fresh round of tightening that began a month ago. Chinese banks have lifted minimum mortgage deposits from 20 to 30 per cent for first home buyers and from 40 to 50 per cent for second home buyers. Beijing and some other major cities went an extra step by suspending all third mortgages, banning mortgage lending to non-city residents and floating threats of a new property tax. Chinese media were required to report ''the success of government policy tightening'' and otherwise guide ''healthy market expectations''.
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