Such practice has caused severely vicious competition among local governments and resulted in the heavy erosion of national properties, according to Li Yuan, the vice-minister.

Li made the remarks over the weekend at the close of the Ministry's three-day national conference on land property management in Hangzhou, capital of East China's Zhejiang Province.

The deliberate land devaluation by local governments may, for a short while, win some investment and boost local economies, but it will not function fruitfully in the long run, Li said.

He urged local officials to give up this dangerous game as soon as possible.

For the same reason, the authorities of various development zones or parks will have their right to govern land supply suspended.

All land supplies for these zones and parks will only be taken as lawful when they have been included in the authorized general land supply plan of local governments above municipal level, said Li.

The ministry has just wrapped up a national investigation on land property management.

Sources with the ministry disclosed some local governments had been asked to make up for the State losses caused by their casual land devaluation.

"Such a large-scale and decisive demand for compensation has never occurred before, but the ministry will be stricter on these issues in the future," said he.

Li said his ministry will establish in the future a national land market mechanism to keep a close watch on land prices.

Land prices can differ according to specific natural, social and economic conditions, but they should be under the control of the central government.

The new system will mainly monitor changes in local land prices and implement macroscopic adjustments.

The establishment of the national land market mechanism will help establish a brand new market-based land managerial mechanism for the next five years. But the task is not easy, Li admitted. Several obstacles must be conquered on the way to fulfilling the ministry's goal.

For example, the ministry is actively seeking co-operation with related authorities to simplify taxes on land deals.

(China Daily December 10, 2001)