When housing prices fall, it will shrink demand and affect the development of real estate businesses and negatively impact the economy, said a recent report from the National Development and Reform Commission (NDRC).

The report was issued after the NDRC analyzed the price fluctuations of homes during the first half of the year.

Chinese real estate businesses have been struggling in recent months. Credit crunch, falling sales and an unpredictable future have caused concern among many developers and investors.

The real estate and construction industry contributes about 20 percent annually to Chinese economic growth. The added value of the two industries accounts for nearly 10 percent of national GDP.

Real estate investment accounts for 20 percent of fixed asset investment and real estate outstanding loans account for 20 percent of the total outstanding loans in commercial banks.

Home sales have helped drive the national economy in the past and they can indicate its future direction.

Officials are considering implementing policies to ease the current strain in the real estate industry.

For more details, please read the full story in Chinese (http://www.eeo.com.cn/Politics/beijing_news/2008/07/10/106170.html).

(China.org.cn July 10, 2008)