China's new policy on overseas investment in the property sector aims to curb hot speculative money from overseas, according to a spokesman for the Ministry of Construction quoted yesterday by Xinhua.

"Compared to its huge population, China's land resources are scarce and the nation faces land constraints," the spokesman said. "We must step up supervision and management of property investment by overseas institutions and individuals from a long-term view."

This is the first time Chinese officials have spoken out on the new policy six ministerial departments promulgated in mid-July.

The current chaos in the property market has obliged the government to intervene, the spokesman said.

Overseas institutions and individuals are currently highly active in the real estate market, he said, but China has no clear rules and standards to regulate their presence.

Under the new policy, overseas institutions must produce documents approving their presence in China when purchasing properties for their own use. These documents will be obligatory when institutions bring in foreign currency or register their properties.

The spokesman said this would also improve the quality of market information available to authorities. Officials currently only have a partial picture of the kind and volume of transactions that are being carried out.

The new policy allows overseas residents who have worked or studied in China for more than one year to buy one housing unit for their own use. The spokesman said these people are considered residents, making their economic activities part of the nation's gross domestic product (GDP).

For those who worked or studied in China for less than one year, their housing demand could be resolved through rental, according to the policy. Residents from Taiwan, Hong Kong and Macao, as well as overseas Chinese, are allowed to buy one housing unit, not exceeding a certain size, for selfuse.

A genuine name is also required for qualified overseas institutions or individuals purchasing houses for personal use, the spokesman said.

"Such a measure is to deter some institutions or individuals from taking advantage of speculation as well as to stabilize and supervise the domestic real estate market."

The new policy also tightened controls on overseas investment in the property development sector.

To engage in the property development business, overseas investors will have to register a new company in China and apply for property development licences, according to Chinese law.

Besides, overseas investors who want to take over or acquire stakes in Chinese property companies will have to pay the full price from their capital reserves in one go. They will also have to deal satisfactorily with employees and debts.

"If they want to qualify for loans from Chinese or foreign banks, overseas-financed property companies will first have to find 35 per cent of the funds needed for a project from their own resources," said the spokesman. "The policy does not discriminate against foreign businesses as it applies to Chinese firms as well."

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