OFFPLAN NEWS

(06.07.2007 )
Real estate China China promises to rein in property market

China promised to restrain its surging Chinese property market, which authorities worry could fan inflation or lead to a financial crisis, possibly undercutting the country's rapid economic growth.

A statement issued Tuesday by eight government agencies said the nationwide campaign would reduce illegal transactions and tax evasion in the property sector.

The government has been trying for several years to cool an investment boom and restrain a jump in housing prices. Chinese leaders are worried that imprudent loans could go bad, leading to a financial crisis.

China's overall economy grew by a torrid 10.7 percent last year, but property development has grown even faster.

The government said spending by developers on apartments, office buildings and other real estate projects nationwide jumped by 21.8 percent in 2006 - despite government efforts to rein in loans for such projects.

The statement, posted on the Ministry of Construction Web site, said the government will investigate companies suspected of "illegal advertising, price manipulation, swindling and tax evasion."

The campaign will run through March 2008 and will also cover "the approval process for property developments and property sales."

Previous government efforts to cool the property sector include raising interest rates, imposing curbs on new construction, raising taxes on real estate transactions and restricting foreign investment in property.

But lower-level leaders have been accused of failing to enforce the curbs for fear of hurting local businesses, and in some cases initiating projects themselves.

Besides the Ministry of Construction, the other agencies that issued the statement were the Ministry of Land and National Resources, Ministry of Finance, National Audit Office, Ministry of Supervision, State Administration of Taxation, National Development and Reform Commission, and the State Administration for Industry and Commerce.

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