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The Chinese economy is growing so fast it risks overheating, according to a research report produced by the Macro Economy Research Institute of the National Development and Reform Commission. The report released on Thursday says the nation's macro economic control efforts should focus on diverting excess liquidity to sectors that are in urgent need of industrial upgrading and to social undertakings. The report also stresses that major policy shifts are needed in Housing prices have surged to the point where the general public is very annoyed. The constant price inflation in the real estate sector has had a negative impact on industrial upgrading and urbanization and widened the income gap. The report says that macro economic control should not focus on reducing excess liquidity but on diverting it from the real estate sector. The report suggests that central and local government should stop treating the real estate sector as a pillar industry. Residents should be discouraged from owning more than one flat. Before the industrialization and urbanization drives are completed, policies should be made to cap development of real estate projects. Estate tax should be levied on homebuyers and profiteering taxes on property developers. Income tax on earnings from housing transfers should be raised to 50 percent from the current two percent, in a bid to curb undue speculation in the sector, according to the report. The report also suggests that measures, such as reducing tax rebates to five percent in the next two to three years, should be taken to curb undue growth in exports. (Xinhua News Agency April 27, 2007)
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