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5 White Paper on the Business Environment in China
developing land a year after acquiring a plot at auction would program in the country and may expand the program when
be barred from bidding for additional land until they rectify time is appropriate.”36 e property tax program, begun in
their irregularities” in order to address the issue of land- 2011 as an attempt to moderate excessive growth in residential
hoarding and that local governments failing to allocate “at least real estate prices and transaction volume, initially only
70 percent of land o ered at auction to a ordable housing, or applied in Chongqing and Shanghai. e above was echoed
small and medium-sized apartments” will be prohibited from in a statement from the State Administration of Taxation in
selling land for luxury housing.32 September 2012.39
Tightening Control over Foreign Investment in Real Estate However, in an almost about-face, according to a report by
Since 2010, several measures have been taken to restrict the O cial China Securities Journal, China would postpone
the expansion of the pilot property tax program. 39. According
foreign investment in the Mainland’s property markets: to China Daily, while the State Council , in February 2013,
On November 4, 2010, the State Administration of Foreign had pledged to strictly implement and improve tightening
measures on the housing market in light of faster-than-
Exchange and the Ministry of Housing and Urban-Rural expected price rises in some cities” and that “One of the
Development “clari ed” a four-year old regulation restricting control directions it named was the expansion of experimental
foreign individuals to the purchase of one residential property property tax reforms” and while the Economic Information
only for personal use and foreign-invested enterprises with Daily had stated that “Wuhan, Hangzhou and Xiangtan
branches or representative o ces to one non-residential possess the basic prerequisites for the launching of such pilots,
house for business use—and only in the city where the o ce including a tax evaluation system”, the same media report
is registered.33 said, “the nal expansion list is still subject to decisions from
the State Council and other related authorities.” 40
On November 22, 2010, the Ministry of Commerce
further released its “Circular on Strengthening the Reviews Most recently, in March 2014, e Wall Street Journal
on the Approval of Foreign Investment into Real Estate states, Vice Finance Minister Liu Kun declared that while
Field”, which aimed to retain speculative and “round- existing pilots in Shanghai and Chonqqing will continue,
tripping” investments. e circular gave provincial authorities there would be no plans to expand the program to other cities.
the mandate to review the integrity of the related land-use Instead, the focus would be on drafting a new property tax
documents, prohibited foreign-invested real estate enterprises law. e same media states that Premier Li Keqiang, in his
from buying or selling properties that are completed or under monthly report, said that “the government wants to accelerate
construction in the PRC for arbitrage as well as prohibiting the introduction of a property tax law.” No timetable,
them from entering into property development or operations however, was indicated.41
businesses, among attempting to close several loopholes
relating to mergers, acquisitions and equity exchanges.34
Finally, in April 2011 foreign investment in the
construction and operation of villas was moved from the
“restricted” category in the Foreign Investment Catalogue to
the “prohibited” one.35
Meantime, as the housing market continues to cool down
with more constrained mortgage availability and tighter
credit, the Chinese government is indicating that di erent
housing policy regulations could be applied to di erent types
of cities. Bloomberg reports that in March 2014, Premier Li
Keqiang said that “the government will regulate the housing
market di erently in di erent cities to take into account local
conditions.” is was echoed by a spokesman from China’s
Statistics Bureau, who said that ““relevant departments will
closely follow the changes in the property market and improve
property macro-control policies accordingly.”38
Possible Expansion of Property Tax Program
According to Housing and Urban-Rural Development
Minister Jiang Weixin, “ e Chinese government is ‘actively
studying’ an expansion of the experimental property tax
182
developing land a year after acquiring a plot at auction would program in the country and may expand the program when
be barred from bidding for additional land until they rectify time is appropriate.”36 e property tax program, begun in
their irregularities” in order to address the issue of land- 2011 as an attempt to moderate excessive growth in residential
hoarding and that local governments failing to allocate “at least real estate prices and transaction volume, initially only
70 percent of land o ered at auction to a ordable housing, or applied in Chongqing and Shanghai. e above was echoed
small and medium-sized apartments” will be prohibited from in a statement from the State Administration of Taxation in
selling land for luxury housing.32 September 2012.39
Tightening Control over Foreign Investment in Real Estate However, in an almost about-face, according to a report by
Since 2010, several measures have been taken to restrict the O cial China Securities Journal, China would postpone
the expansion of the pilot property tax program. 39. According
foreign investment in the Mainland’s property markets: to China Daily, while the State Council , in February 2013,
On November 4, 2010, the State Administration of Foreign had pledged to strictly implement and improve tightening
measures on the housing market in light of faster-than-
Exchange and the Ministry of Housing and Urban-Rural expected price rises in some cities” and that “One of the
Development “clari ed” a four-year old regulation restricting control directions it named was the expansion of experimental
foreign individuals to the purchase of one residential property property tax reforms” and while the Economic Information
only for personal use and foreign-invested enterprises with Daily had stated that “Wuhan, Hangzhou and Xiangtan
branches or representative o ces to one non-residential possess the basic prerequisites for the launching of such pilots,
house for business use—and only in the city where the o ce including a tax evaluation system”, the same media report
is registered.33 said, “the nal expansion list is still subject to decisions from
the State Council and other related authorities.” 40
On November 22, 2010, the Ministry of Commerce
further released its “Circular on Strengthening the Reviews Most recently, in March 2014, e Wall Street Journal
on the Approval of Foreign Investment into Real Estate states, Vice Finance Minister Liu Kun declared that while
Field”, which aimed to retain speculative and “round- existing pilots in Shanghai and Chonqqing will continue,
tripping” investments. e circular gave provincial authorities there would be no plans to expand the program to other cities.
the mandate to review the integrity of the related land-use Instead, the focus would be on drafting a new property tax
documents, prohibited foreign-invested real estate enterprises law. e same media states that Premier Li Keqiang, in his
from buying or selling properties that are completed or under monthly report, said that “the government wants to accelerate
construction in the PRC for arbitrage as well as prohibiting the introduction of a property tax law.” No timetable,
them from entering into property development or operations however, was indicated.41
businesses, among attempting to close several loopholes
relating to mergers, acquisitions and equity exchanges.34
Finally, in April 2011 foreign investment in the
construction and operation of villas was moved from the
“restricted” category in the Foreign Investment Catalogue to
the “prohibited” one.35
Meantime, as the housing market continues to cool down
with more constrained mortgage availability and tighter
credit, the Chinese government is indicating that di erent
housing policy regulations could be applied to di erent types
of cities. Bloomberg reports that in March 2014, Premier Li
Keqiang said that “the government will regulate the housing
market di erently in di erent cities to take into account local
conditions.” is was echoed by a spokesman from China’s
Statistics Bureau, who said that ““relevant departments will
closely follow the changes in the property market and improve
property macro-control policies accordingly.”38
Possible Expansion of Property Tax Program
According to Housing and Urban-Rural Development
Minister Jiang Weixin, “ e Chinese government is ‘actively
studying’ an expansion of the experimental property tax
182
