[photopress:shanghai.jpg,full,alignright]The Chinese government seriously wants to rein in overseas property speculators. Now foreigners have to get approval before they send funds out of the country if the money was earned from real estate nvestments.
The State Administration of Foreign Exchange (SAFE) and the Ministry of Construction jointly issued a circular on the management of foreign investment in China’s housing sector. Investors who want to take over or acquire stakes in Chinese property companies will have to come up with the full purchase price. As well, if they want to qualify for loans from Chinese or foreign banks, overseas-financed property companies will have to provide 35 percent of the funds needed themselves. That 35 percent cannot be borrowed.
Overseas institutions are also being asked to provide documentation of their presence in China when buying property for their own use. According to the circular, funds from foreign property investors should flow directly to the Renminbi accounts of property developers. The idea is to close out speculators from overseas.
Figures from the IMF (International Monetary Fund) show that of its 187 members, 137 control the overseas investment in their domestic property market. The ministry sees that as indicating that China’s new action is a practice which is internationally accepted.
Source: China Daily