Foreign speculation in property to be curbed
(chinanews.cn)
Updated: 2006-06-02 12:54
According to a report by Shanghai Securities News, overseas capital has not
been carefully watched over as a source of funding for real estate development.
But it was understood that China's Securities for Foreign Exchange
Administration (SAFE) has begun to strengthen its supervision in this arena and
it is probable that strict rules against foreign speculation in real estate will
be enacted in short order.
In the second half of April, SAFE's capital account supervisory deputy chief
Sun Lujun said that SAFE has been on a high state of alert regarding the sharp
increase in foreign capital in China's property market and "other investments"
and is actively discussing appropriate countermeasures.
Prior to this remark, statistical bureau spokesperson Zheng Jingping has
publicly called for the appropriate adjustment of policies governing the direct
entry of foreign capital into real estate arenas.
Afterwards, in the end-of-April SAFE International Balance of Payment Annual
Report, mention was made of the high-level attention paid to the role of foreign
capital in China's property markets in order to "preserve the economic and
financial security of the nation."
Statistics show that in 2005, foreign capital bought US$3.4 billion worth of
Chinese property. However, due to imperfections in methods of collecting these
statistics, a large amount of foreign funds invested in China's real estate have
escaped recognition and the latter has directly contributed to the endless rise
in China's property prices.
Numerous Chinese scholars have called for tighter controls by supervisory
departments of these "back-door" entries into China by foreign capital through
real estate investments.
Some scholars warned that the entry of foreign capital into industries during
their inflationary stage would accelerate the formation of bubbles and the
subsequent withdrawal of foreign capital could trigger financial panics, leading
to the bursting of these bubbles.
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