A report on Shanghai's financial operation in 2004 released on Wednesday by the People's Bank of China (PBC) says that unfinished statistics indicate over 22.2 billion yuan of offshore funds flowing into Shanghai housing market from January to November in 2004. Of the money about 15 billion yuan was used in real estate development and about 7 billion yuan was used in house purchasing.

The report says as restrictions on foreign investment entering the real estate area have been essentially eliminated the continued hike of real estate prices and the expectation of a RMB appreciation have brought overseas speculative money into Shanghai's real estate market.

The State Administration of Foreign Exchange said in March that some foreigners had bought dozens, even a hundred suites in Shanghai, which was apparently of speculative nature. The discovery gave rise to further investigation.

The report, compiled by the monetary policy analyzing team at the Shanghai Branch of the PBC, says local residents were still the main force in house purchasing. However, non-local and overseas people also accounted for a considerable proportion (about 20 percent).

By People's Daily Online