China to restrict foreign investments in real estate to curb growth

Beijing - China, as part of its efforts to cool down the rapid growth of investments, will restrict foreign investments in real estate, the Xinhua news agency reported today. Recently, Beijing has been taking a series of steps to slow down the high economic growth and prevent the danger of overheating followed by a crisis.
    According to the proposed new rules, "restrictions on the purchase of residential real estate" will be imposed on foreigners, the Chinese agency stated without further details. Developers will be required to invest more of their own money into construction projects and limit credit sources.
    Last month, the AP agency reported that the new rules would allow foreigners to buy residential houses only for their own living purposes. Any sale or transfer of properties would then require government approval.
    Last month, the Chinese central bank stated that it is intensifying efforts to limit the amount of money in the banking system to curb lending activities and investments. In recent weeks, the bank also raised the reserve requirements for commercial banks by half a percentage point against deposits.
    The number of new construction projects in China increased by 22.2 percent in the first half of the year. Meanwhile, foreign investments in Chinese real estate rose by 27.9 percent. Investors want to benefit from rising real estate prices as well as the anticipated appreciation of the Chinese currency.
    Beijing has been trying to cool down the economy for some time through higher interest rates, stricter lending rules, and even bans on new projects in certain sectors. For this year, the government initially planned to slow down growth from nearly ten percent to eight percent; however, according to the latest reports, GDP grew by 11.3 percent in the first quarter.