China raises scrutiny of property sector

BEIJING Wed Dec 22, 2010 6:25pm IST

Construction workers erect scaffolding on a new residential building in central Beijing, September 10, 2010. REUTERS/David Gray/Files

Construction workers erect scaffolding on a new residential building in central Beijing, September 10, 2010.

Credit: Reuters/David Gray/Files

Related Topics

BEIJING (Reuters) - China will harden measures against speculation in its red-hot property market by intensifying scrutiny of foreign investment in the sector, according to a government website posting seen on Wednesday.

The Ministry of Commerce, which oversees foreign investment in China, said it would increase checks on property investment involving foreign currencies and ban foreign investors from betting on capital gains.

It did not elaborate on how the ban would be implemented. The statement was seen on the ministry's website (www.mofcom.gov.cn) for the first time and cited by several local news portals on Wednesday, but it was unclear why it was dated Nov 22.

Analysts said the remarks suggested the government was sharpening its rhetoric against hot money inflows into the property sector.

"The measures are the same as before, but the rhetoric is more serious," said Chen Dong, a property analyst at BOC International in Shanghai. "Still, it will be difficult to stop hot money inflows."

China's buoyant property markets have for months unsettled the government, which is worried frothy prices will fuel inflation and a housing bubble that will eventually burst with negative consequences for the wider economy.

The government stepped up its measures to cool property prices in late September by ordering home buyers to pay higher down payments and mortgage rates.

Officials have also tried to staunch speculative investment funds from flowing into the country, with the Chinese foreign exchange regulator stepping up checks on cross-border capital flows.

"This is a reinforcement of rules originally issued in 2007. Some authorities loosened the implementation during 2008 and 2009 amid the global financial crisis," said Wu Tao, chief executive officer of Wins Investment in Beijing.

He added the latest move was also part of China's efforts to rein in foreign investors who are betting on a stronger yuan.

Many Chinese cities have revived their restrictions on foreign property investment in recent months by banning foreigners from buying multiple units, and requiring them to stay in China for at least a year before making purchases.

(Reporting by Langi Chiang and Koh Gui Qing; Editing by Benjamin Kang Lim and Alex Richardson)

FILED UNDER:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage