Page 246 - 2017 White Paper
P. 246
7 White Paper on the Business Environment in China
Offering context for the additional regulation of offices to one non-residential house for business use—
construction, Xinhua notes that: and only in the city where the office is registered (China
Briefing 2010a).
Malpractice in the contracting of construction projects
has become a major cause of poor-quality housing On November 22, 2010, the Ministry of Commerce
and infrastructure projects in China. Some projects further released its “Circular on Strengthening the
have been outsourced again and again among many Reviews on the Approval of Foreign Investment into
contractors and subcontractors, making it difficult Real Estate Field”, which aimed to retain speculative and
to check the qualifications of builders and supervise “round-tripping”investments. The circular gave provincial
construction quality. authorities the mandate to review the integrity of the
related land-use documents, prohibited foreign-invested
In a number of cases, irregular contracting has also real estate enterprises from buying or selling properties
resulted in defaulted payments to construction workers that are completed or under construction in the PRC for
(Xinhua 2012a). arbitrage as well as prohibiting them from entering into
property development or operations businesses, among
Regulatory Attempts to Contain Housing attempting to close several loopholes relating to mergers,
Prices acquisitions and equity exchanges (China Briefing 2010b).
In addition to macroeconomic adjustments, increased Finally, in April 2011 foreign investment in the
down payment requirements and the new property tax, construction and operation of villas was moved from the
the Ministry of Land Resources has added additional “restricted”category in the Foreign Investment Catalogue
regulatory pressure on developers to assist with the to the “prohibited” one (China Briefing 2011a).
Central Government’s property price control efforts.
Meantime, as the housing market continues to cool
A September 2010 release from the Ministry stipulated down with more constrained mortgage availability and
that, among other things, “Chinese property developers tighter credit, the Chinese government is indicating that
and their controlling shareholders will be banned from different housing policy regulations could be applied to
participating in land auctions if they are found guilty different types of cities. Bloomberg reports that in March
of illegal activities”, that “Developers who have failed 2014, Premier Li Keqiang said that “the government will
to start developing land a year after acquiring a plot at regulate the housing market differently in different cities
auction would be barred from bidding for additional land to take into account local conditions”. This was echoed by
until they rectify their irregularities” in order to address a spokesman from China’s Statistics Bureau, who said that
the issue of land-hoarding and that local governments “relevant departments will closely follow the changes
failing to allocate “at least 70 percent of land offered at in the property market and improve property macro-
auction to affordable housing, or small and medium- control policies accordingly” (Bloomberg 2014).
sized apartments” will be prohibited from selling land for
luxury housing” (Gov.cn 2010). Property Tax Program
Tightening Control over Foreign According to Housing and Urban-Rural Development
Investment in Real Estate Minister Jiang Weixin, “the Chinese government is
‘actively studying’ an expansion of the experimental
Since 2010, several measures have been taken to property tax program in the country and may expand
restrict foreign investment in the Mainland’s property the program when time is appropriate” (Xinhua 2012c).
markets: The property tax program, begun in 2011 as an attempt
to moderate excessive growth in residential real estate
On November 4, 2010, the State Administration of prices and transaction volume, initially only applied in
Foreign Exchange and the Ministry of Housing and Urban- Chongqing and Shanghai. The above was echoed in a
Rural Development “clarified” a four-year old regulation statement from the State Administration of Taxation in
restricting foreign individuals to the purchase of one September 2012 (Reuters 2013c).
residential property only for personal use and foreign-
invested enterprises with branches or representative
246
Offering context for the additional regulation of offices to one non-residential house for business use—
construction, Xinhua notes that: and only in the city where the office is registered (China
Briefing 2010a).
Malpractice in the contracting of construction projects
has become a major cause of poor-quality housing On November 22, 2010, the Ministry of Commerce
and infrastructure projects in China. Some projects further released its “Circular on Strengthening the
have been outsourced again and again among many Reviews on the Approval of Foreign Investment into
contractors and subcontractors, making it difficult Real Estate Field”, which aimed to retain speculative and
to check the qualifications of builders and supervise “round-tripping”investments. The circular gave provincial
construction quality. authorities the mandate to review the integrity of the
related land-use documents, prohibited foreign-invested
In a number of cases, irregular contracting has also real estate enterprises from buying or selling properties
resulted in defaulted payments to construction workers that are completed or under construction in the PRC for
(Xinhua 2012a). arbitrage as well as prohibiting them from entering into
property development or operations businesses, among
Regulatory Attempts to Contain Housing attempting to close several loopholes relating to mergers,
Prices acquisitions and equity exchanges (China Briefing 2010b).
In addition to macroeconomic adjustments, increased Finally, in April 2011 foreign investment in the
down payment requirements and the new property tax, construction and operation of villas was moved from the
the Ministry of Land Resources has added additional “restricted”category in the Foreign Investment Catalogue
regulatory pressure on developers to assist with the to the “prohibited” one (China Briefing 2011a).
Central Government’s property price control efforts.
Meantime, as the housing market continues to cool
A September 2010 release from the Ministry stipulated down with more constrained mortgage availability and
that, among other things, “Chinese property developers tighter credit, the Chinese government is indicating that
and their controlling shareholders will be banned from different housing policy regulations could be applied to
participating in land auctions if they are found guilty different types of cities. Bloomberg reports that in March
of illegal activities”, that “Developers who have failed 2014, Premier Li Keqiang said that “the government will
to start developing land a year after acquiring a plot at regulate the housing market differently in different cities
auction would be barred from bidding for additional land to take into account local conditions”. This was echoed by
until they rectify their irregularities” in order to address a spokesman from China’s Statistics Bureau, who said that
the issue of land-hoarding and that local governments “relevant departments will closely follow the changes
failing to allocate “at least 70 percent of land offered at in the property market and improve property macro-
auction to affordable housing, or small and medium- control policies accordingly” (Bloomberg 2014).
sized apartments” will be prohibited from selling land for
luxury housing” (Gov.cn 2010). Property Tax Program
Tightening Control over Foreign According to Housing and Urban-Rural Development
Investment in Real Estate Minister Jiang Weixin, “the Chinese government is
‘actively studying’ an expansion of the experimental
Since 2010, several measures have been taken to property tax program in the country and may expand
restrict foreign investment in the Mainland’s property the program when time is appropriate” (Xinhua 2012c).
markets: The property tax program, begun in 2011 as an attempt
to moderate excessive growth in residential real estate
On November 4, 2010, the State Administration of prices and transaction volume, initially only applied in
Foreign Exchange and the Ministry of Housing and Urban- Chongqing and Shanghai. The above was echoed in a
Rural Development “clarified” a four-year old regulation statement from the State Administration of Taxation in
restricting foreign individuals to the purchase of one September 2012 (Reuters 2013c).
residential property only for personal use and foreign-
invested enterprises with branches or representative
246
