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Monday, January 11, 2010

Beijing vows to keep 'hot money' out of property market

BEIJING: China vowed yesterday not to let foreign speculative investment affect the property market, the latest expression of official concern that real-estate prices are racing ahead too fast.

The directive from the State Council, China's Cabinet, will serve as a guideline for local authorities and ministries, including the People's Bank of China and the China Banking Regulatory Commission, to work out detailed policies.

"Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China's real-estate market," the Cabinet said.

It said the central bank and banking regulator should step up oversight and "window guidance" of mortgage lending.
About one-sixth of China's nearly 10 trillion yuan (100 yuan = RM49.48) in new loans last year flowed into the property sector.

Concerned that a property bubble could stir social and economic instability, Beijing has vowed to combat overly fast price increases, although its moves to date, such as restricting sales tax exemptions, have been relatively mild.

The Cabinet urged local authorities, especially in cities where housing prices are rising sharply, to increase the supply of affordable housing.

It reiterated that it would curb house buying for "investment and speculation purposes" and keep the minimum down payment for purchases of second homes at 40 per cent.

Separately, China's finance minister said the government would likely spend the full amount of its planned stimulus in 2010, despite improvements in its economy and efforts to control bank lending.

Finance Minister Xie Xuren's comments could help to reassure companies and investors that Beijing will keep spending to shore up growth.

Xie said Beijing plans to spend 992.7 billion yuan on public investment in 2010, Xinhua News Agency reported, including 572.2 billion yuan of stimulus funds.

The state-run news agency gave no indication whether Xie's comments included whether the rest of the stimulus due to come from other levels of government also would be fully spent.

Xie's comments add to a string of assurances that official aid will continue, especially to private companies, which missed out on the first year of the stimulus. - Agencies

By Business Times

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