china further tightens grip on property market
News Posted On: 16 January 2012
A statement from the Chinese Ministry of Commerce shows it is determined that foreign funded developers won't be able to make profits through property projects.
The ministry has come out and asked local authorities to increase risk controls in the property sector, and to make sure property projects involving foreigners receive greater supervision. The new property taxes trialled in Shanghai and Chongqing in the latter part of last year are also looking more and more likely to be rolled out across the country.
While some government departments favour greater property market controls, others think property restrictions should be loosened. This includes local governments, who depend on property and land sales for tax revenue and who aren't keen to implement tightening measures because of the effect it would have upon their income.
This has sometimes resulted in a struggle between local governments and central government. A prime example was Foshan in the province of Guangdong, which in October had to reverse a decision previously made to ease property purchase restrictions.
The central government is determined to regain control over property prices and bring them down to more affordable levels. Sales have already fallen significantly in major cities compared to a year ago and average property prices in China have now fallen for two consecutive months.
The government considers its controls necessary not only to curb prices but also to ensure a stable property market, which is essential for economic growth. China is still predicted to see enviable economic growth of around 8.5% this year, with inflation expected to stay below 4%.
Written by Liam Bailey
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