According to a statement from the Chinese Ministry of Commerce (MOC), China will tighten its restrictions on foreign real estate investment. The MOC has asked local authorities to increase supervision on property investment involving foreigners and strengthen risk controls on the real estate sector.
The statement stipulates; foreign funded developers will not be allowed to make profits through buying and reselling real estate projects.
The MOC also stated that it would strictly monitor all transactions in conjunction with the Ministry of Land and Resources and the State Administration of Foreign Exchange.
Foreign direct investment into China's property sector rose by forty eight percent to twenty billion US dollars within the first eleven months of this year, 2010.
Since the beginning of 2010 China has introduced a number of measures aimed at cracking down on property market speculation, in an attempt to stabilise China's rapidly rising property prices. The measures have included, prohibiting the issuance of mortgage loans for third home purchases and raising down payments.
According to the Chinese National Bureau of Statistics, property prices in seventy of China's cities rose by 0.3 percent in November 2010, and by 7.7 percent from the same time in 2009.
This shows that although property prices are still on the increase in China, the rate of increase has slowed, and it indicates that the Chinese Government's measures, designed to cool the property market, are working to some degree.
It is widely believed that foreign money is partly to blame for soaring housing prices in major cities, though the current system makes it hard for the government to have a reliable figure on the actual size of the foreign investment in the sector.
The State Administration of Foreign Exchange (SAFE) is already working to improve its international payments statistics system to enable tracking of "hot money" into the country.
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