CHINA’S financial sector faces bubble risks, a government official warned Thursday and said a property tax may be on the cards in the near future as authorities extended their efforts to reduce a worrisome build-up of debt.

The ratio of China’s financial sector to the overall economy “is the highest ratio in the world,” said Huang Qifan, deputy chairman of the economic and finance committee under the National People’s Congress.

“This is not a good thing,” Huang told a finance forum.

China’s financial sector as a share of gross domestic product was 8.5 percent in the first nine months of this year.

The government is in the second year of a crackdown on speculative investment and high corporate debt levels as it looks to defuse financial risks and a property bubble.

Authorities have been particularly concerned about speculative financing and have taken a hard line against risky, shadow banking activities.

Progress, however, has been mixed as policymakers walk a tight rope in trying to reduce China’s years-long addiction to debt without shattering economic growth.

Borrowing rates have risen slightly and M2, or broad money supply, growth slowed to a record low of 8.8 percent year on year in October. But credit continues to expand faster than gross domestic product (GDP) and consumer debt is rising very rapidly.

“M2 in the United States is 70 percent of GDP, ours is over 200 percent,” said Huang.

“The excessively high M2 leads to inflation, primarily reflected in housing prices, which have risen about eight-fold in the past 10 years.”

Huang said a property tax could be on the cards in the next few years, adding it will help temper speculation in a sector that has drawn a raft of government curbs in the past year.

(SD-Agencies)