First let us make it clear that SOE stands for state owned enterprise. So, in a sense, it is the government although it may be remote and disparate parts of the government.
Changfeng lands 6B and 7C were purchased by China Overseas Land and Investment (COLI) at RMB 7.006 billion, with an average floor price of RMB 22,409.3 m², a 129% premium rate. Sounds like private enterprise but it is not. COLI is Hong Kong-listed and the subsidiary of China State Construction Engineering Corporation (CSCEC), a state-owned enterprise (SOE) that listed on the Shanghai Stock Exchange on July 29.Another SOE, Shenzhen Overseas Chinese Town Holding Corporation (OCT), purchased residential land at RMB530 million in Jiangangshan, Baoan district, in Shenzhen. The floor price was RMB 18,900 /m² breaking the Shenzhen record.
Prime Minister Wen Jiabao and his lieutenants keep saying that China will not exit from loose monetary policy and expansionary fiscal policy soon, and developers see more room to raise prices of both land and housing.
The National Audit Office data shows that 25 central ministries are involved in real estate violations, worth billions of yuan.
Among them, unlisted assets of RMB51.6917 million from the Ministry of Foreign Affairs have gone into purchasing real estate.
The Ministry of Agriculture has developed commercial housing, acting beyond its authority, and has submitted false reports on housing subsidies.
In 2008, a real estate rental service center under the Ministry of Finance took in rental income of RMB5.3193 million.
The Ministry of Public Security has approved construction projects worth RMB422 million.
Of the 136 central enterprises under the State-owned Assets Supervision Administration Commission, about 70% of the companies are involved in real estate, among which 16 firms are primarily based in the property industry, including Poly, Sino-Ocean and China Resources, while more than 80 outside firms have business in real estate.
Among the top ten highest priced land purchases in major cities in the first half of this year, 60% went to SOEs.
The greatest beneficiaries of the government’s loose monetary and stimulus policies have been SOEs, which is the government in another guise.
At the same time small and medium firms, which are not part of the government, still have difficulties acquiring capital. Many large real estate firms have obtained capital through their SOE connection rather than profits from the market.
China Stakes states these moves by SOEs are related to production surpluses in most industries. Since investment in plants and equipment now may incur losses, many companies choose to hoard land and purchase houses with the sums they have been allowed to borrow.