The real estate industry, more than any other, is feeling the pinch of the tighter lending standards being applied by banks across the country.

China does not follow the international lending standards intended to fight corruption in the region.

Newly liberal lending standards, which often require only a small down payment, have in recent years allowed many people to buy their first house.

Despite greatly relaxed lending standards and low interest rates, many regions of the country saw very little growth during the "bubble period".

In fact, many bankers say they have not raised their lending standards.

He conceded that tougher lending standards have "potential effects on the level of local economic activity."

"What has changed from a few years ago," he said, "is the condition of our customers and the economy, not our lending standards."

One thing bankers say they are not doing is cutting lending standards in order to gain business.

The experience was cathartic, as the remaining companies tightened their lending standards and raised prices nearly 50 percent.

He said financial institutions were already tightening their lending standards, which would eventually bring the housing market back into balance.