Analysis of China’s Real Estate Industry and Banking Industry Based on NPL And China Real Estate Climate Index

Abstract

This paper explores the relationship between real estate risks and banks through two sets of data: the China real estate Climate Index and bank non-performing loans. Correlation analysis showed a moderate negative correlation between the two factors, with correlation=-0.61333. The downside risk of the real estate sector will be passed on to the banks and may trigger a credit crisis for the banks. From the perspective of real estate developers, implementing the three red-line financing policies of China's real estate enterprises has caused difficulties in financing. On the buyer side, residents' expectations that real estate prices would rise forever have reversed. Meanwhile, the recurrence of COVID-19 in China has severely affected the country's economy and made residents' expectations for the future more uncertain. These common factors have led to downward pressure on the property sector. This scenario poses a challenge for Chinese policymaking. China's policies must rescue the property sector while ensuring it does not overheat again.