Efforts to curb hot speculative money from overseas being
invested in China's property sector has resulted in a new policy on
foreign funding in the sector, according to a spokesman for the
Ministry of Construction quoted yesterday by Xinhua.
"Compared to its huge population China's land resources are
scarce and the nation faces land constraints," the spokesman said.
"We must step up supervision and management of property investment
by overseas institutions and individuals from a long-term
view."
This is the first time Chinese officials have spoken out on the
new policy six ministerial departments promulgated in mid-July. The
current chaos in the property market has obliged the government to
intervene, the spokesman said.
Overseas institutions and individuals were currently highly
active in the real estate market, he said, but China had no clear
rules and standards to regulate their activities.
Under the new policy overseas institutions must produce
documents approving their presence in China when purchasing
properties for their own use. These documents will be obligatory
when institutions bring in foreign currency or register their
properties.
?
The spokesman said this would also improve the quality of market
information available to the authorities. Officials currently only
have a partial picture of the type and volume of transactions being
carried out.
The new policy allows overseas residents who have worked or
studied in China for more than one year to buy a single housing
unit for their own use. The spokesman said these people were
considered residents which made their financial activities part of
the nation's gross domestic product (GDP).
For those who worked or studied in China for less than one year
their housing demands could be resolved through rental, according
to the policy. Residents from Taiwan, Hong Kong and Macao, as well
as overseas Chinese, are allowed to buy one housing unit, not
exceeding a certain size, for their own use.
A genuine name is also required for qualified overseas
institutions or individuals purchasing houses for personal use, the
spokesman said. "Such a measure is to deter some institutions or
individuals from taking advantage of speculation as well as to
stabilize and supervise the domestic real estate market," he
said.?
The new policy also tightened controls on overseas investment in
the property development sector. To engage in the property
development business overseas investors will have to register a new
company in China and apply for property development licenses,
according to Chinese law.
And overseas investors who want to take over or acquire stakes
in Chinese property companies will have to meet the full price from
their capital reserves in one payment. They'll also have to deal
satisfactorily with employees and debts.
"If they want to qualify for loans from Chinese or foreign banks
the overseas-financed property companies will first have to find 35
percent of the funds needed for a project from their own
resources," said the spokesman. "The policy does not discriminate
against foreign businesses as it applies to Chinese firms as
well."
(China Daily August 8, 2006)