Chinese media are reporting that the country's regulators have called for stress tests on loans to a range of industries, including cement and steel, whose fortunes are closely tied to property markets.
The tests, part of a broader investigation into banks' ability to withstand falls in housing prices, point to the government's determination to hold tightening policies in place until the property sector cools off.
The tests envisage a 60% plunge in housing prices, but analysts warned against reading too much into the extreme scenario, saying the market was likely to weaken but not collapse in such a spectacular fashion.
China stepped up a tightening campaign earlier this year to squeeze any bubbles out of its red-hot property market, but while the number of deals has fallen, prices have barely dipped.
The China Banking Regulatory Commission (CBRC) declined to comment directly on reports of the ultra-stringent bank stress tests. But in a statement on its website late on Thursday, it said that stress tests differed from bank to bank and formed part of continual efforts at risk management.
Hypothetical scenarios examined in stress tests did not reflect regulators' forecasts for the property sector and nor did they herald any change in policy, the CBRC added.
Banks in seven cities, including Beijing, Shanghai and Shenzhen, have been asked to examine the impact of a fall in property values of up to 60%, the official China Securities Journal reported. Banks in the seven cities must submit the stress test results to their provincial regulator before August 13, it added.
The CBRC has also instructed banks to stop extending mortgages to people buying their third homes in at least four booming cities - Beijing, Shanghai, Shenzhen and Hangzhou.
The government launched a property tightening campaign in April, demanding higher down payments and curbing loans to buyers of multiple homes, because of concerns that prices were rising too fast and developing into a dangerous asset bubble.
