China's new policy on overseas investment in the property sector aims to shut the gates on hot speculative money from overseas, a spokesperson for the Ministry of Construction said in Beijing Monday.

"China's land resources are scarce and its population huge. Anyone can see that China faces land constraints. We must take a long-term view and step up supervision of property investment by overseas institutions and individuals," the spokesperson said in an exclusive statement to Xinhua.

This is the first time Chinese officials have spoken out on the new policy since it was promulgated in mid-July.

The current chaos in the property market has obliged the government to intervene, the spokesperson said. Overseas institutions and individuals are highly active in the market, he said, but there are no clear rules and standards to regulate their presence.

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

The spokesperson 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 spokesperson said these people are considered residents and their economic activities are part of China's gross domestic product (GDP).

China is in the midst of a property boom, with housing prices in major cities soaring despite massive housing development. The new policy is part of the government's three-year efforts to rein in the galloping 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 licenses.

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 percent of the funds needed for a project from their own resources.

The spokesperson said the policy does not discriminate against foreign businesses, because it also applies to Chinese firms.

Source: Xinhua