Warning of defaults

The quick denial by the people's bank of China that it is involved in bailout talks with a small property developer in East China's Zhejiang province, gives fair warning against the widespread moral hazard within and beyond the overheated property sector that reckless lenders and borrowers can always count on the government to bail them out.

Such a blunt warning on defaults is badly needed.

Thanks to the huge contribution that the booming real estate sector has made to both local governments' revenues and the country's investment-led growth, especially during the 2008 global financial crisis, Chinese policymakers have largely stomached rocketing prices and excessive investment in the sector.