China Lifts Restrictions on Foreign Investments to Boost Economy
In order to save its floundering economy, the Chinese government has relaxed its rules on property sales to foreigners. A rule requiring buyers to live in the country for a year before making a purchase will be abolished, China's commerce ministry said late last week, along with a relaxation on the number of properties one investor can own. In addition, foreign businesses will no longer need to pay their company’s full registered capital before receiving a loan. The rulings are the latest in a series of government initiatives to reverse the country's economic downturn. Getting rid of these restrictions—introduced in 2006 in order to prevent speculation in a rapidly overheating market—is expected to boost the now sluggish market, where companies face financial troubles as they struggle to move unsold housing. Chinese analysts say these new regulations are due to a “matured” market that will no longer be hurt by foreign purchases, and others say that the devalued yuan and cut interest rates will make Chinese properties quite attractive. However, major cities (mainly Shanghai (pictured) and Beijing) still have some major restrictions, keeping the one building per buyer rule. Furthermore, observers have noticed that the Chinese have raised prices significantly to deter speculation. [IBT]
