China Mortgage Market Being Squeezed, Fed Decides To Not Crush China's Economy Like A Grape

The article says real estate is still a bubble and needs liquidity support and the whole debt market, from local governments to shadow banks, will erupt into crisis.

iFeng: 美联储为何9月不加息 中国房价会有几大变化
First, the Federal Reserve to raise interest rates, a trend make hot money leave China, Sept. liquidity environment will be in "tight balance" the state. In the August 26 after the central bank announced interest rate cuts RRR, August 31 the central bank through SLO (short-term liquidity adjustment tool) invested 140 billion of liquidity, the central bank yesterday (1 September) has launched a 150 billion size of the 7 days period reverse repurchase operations, the successful rate of 2.35%. So from the liquidity, the adverse impact on the Chinese real estate industry, because the real estate bubble needs a lot of liquidity support.

It is worth mentioning that the recent regulators in order to stabilize economic growth and avoid the real estate crisis, relaxed outer limit order, while the proportion of two suites down payment down to 20 percent. However, due to tight liquidity constraints, banks do not necessarily have the funds to provide enough new loans to the real estate sector. Even if the bank can lend money buyers, in the case of liquidity shortage, mortgage interest rates will be raised accordingly, the cost of home buyers and will not be small.

...Finally, the expected depreciation of the RMB, China's economic restructuring and increase uncertainty in the domestic and foreign hedge funds outflow is the trend. Chinese richest man Li Ka-shing also sold off mainland property, "Abandon the Old Ways and Learn From Europe", which will cause investors to reduce price rise expectations, the domestic real estate is bound to enter into an adjustment period. And when the Chinese real estate bubble bursts, it will immediately set off a series hibernating crises: local government debt, manufacturing bad loans, shadow banking bad debt.

In the economic globalization today, the Federal Reserve has been raising interest rates in the United States is not a simple problem, it will give other economies, especially in emerging economies, causing immeasurable impact. When the US economic recession, the Fed announced QE, while in emerging economies, led by China, followed monetary easing, resulting in a simultaneous rising inflation and asset bubbles, and when the Fed announced the rate hike, the economy and is in the structure an adjustment period, so its impact will be more direct form. For Chinese decision-makers, once the Fed rate hike that would be China's financial sector and the overall economy will face serious challenges.
Emphasis in the original.

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