BIZCHINA / Top Biz News

Rules expected to fight 'hot money'
By Zhang Jin and Hui Ching-hoo (China Daily)
Updated: 2006-07-11 08:43

In a drive to prevent "hot money" flowing into China, the government is likely to issue a set of measures "within days" to check overseas investors' purchases of mainland property.

"The measures will come this week, probably at the end of the week," a source familiar with the situation told China Daily.

Another source, who has wide connections in Beijing's property market, also expected the regulations to be issued imminently, unless favourable figures are released, showing recent measures aimed at cooling the property market are driving "hot money" out.

Government sources were not available for comment last night.

The rules, to be issued by the State Administration of Foreign Exchange and other ministries, seem necessary after the mainland registered a 31.3 per cent growth in fixed-asset investments between January and May. Property made up the bulk of the growth.

The move would follow a raft of cool-down measures issued by the government in May.

The measures included an increase in the down-payment ratio and a tightening of credit rules to slow down rampant investment in the high-end property market and boost the supply of low-cost houses.

"This round of tightening policies are tougher than last year's," said Liao Qun, an economist with Hong Kong's CITIC Ka Wah Bank.

"And more austerity measures are on the cards if the situation does not improve," he added, stressing his comments did not refer to a check on international funds.

However, the mainland's senior officials recently said rules to check international funds flowing into China's property market are being discussed and drafted.

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