An official with the Ministry of Land and Resources has clarified the position on land prices, which he said was misinterpreted by the media to mean an overall price hike of up to 50 percent, Shanghai Securities News reported yesterday.

Gan Cangchun, director of the ministry's Policies and Regulations Department, said that the 50-percent price hike envisaged by the ministry refers only to land for industrial use.

Gan was referring to a report published in International Finance News on Monday. According to the report, the ministry's planned restrictions on land use were likely to drive land prices up by as much as 50 percent.

The report said that land prices in China can be categorized as follows: acquisition costs, including compensation for requisitioned land; investment or development costs; and government profits, made up of land-use fees, taxes levied for the utilization of cultivated land and other similar charges.

New measures, contained in a ministry circular issued on September 5, will increase all three categories of pricing by up to two times. Average cost prices will increase by between 33 percent and 50 percent, with increases corresponding to the purpose of land use. Prices for land for residential use will be kept stable, and are expected to fluctuate somewhat only in the smaller cities. Prices for land for industrial use will be raised by between 40 percent and 60 percent.

Gan clarified that compensation for requisitioned land could double, as could fees and taxes for the industrial use of cultivated land.
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He explained that these new measures were introduced to address issues such as price manipulation by local governments. In many parts of China, local authorities often lower prices for industrial land in order to attract more investment.

(China.org.cn by Wang Ke, September 13, 2006)