China will create five new ’super ministries.’ The goal of this move is to streamline the bureaucracy, clarify conflicting responsibilities, and curb corruption.

1. The National Development and Reform Commission — NDRC — will focus on macroeconomic planning, paying particular attention to price controls and the management of energy policy.
2. The Ministry of Finance will reform and improve its management over budget and taxation.
3. The People’s Bank of China will strengthen the system of monetary policies and improve the mechanism of exchange rate formation.

The State Council also plans to strengthen the coordination amongst the three above-mentioned bodies,

One area that has not been addressed is the lack of supervision over the NDRC. The three bodies are not on equal footing. The NDRC will set annual control targets to coordinate monetary, fiscal, and industry policies, and this means that it will remain a key player in the State Council.

The Ministry of Construction change to the Ministry of Housing and Urban and Rural Construction was according to Forbes.com, in order to emphasize its role in building affordable housing for low-income families in China. Our illustration is of elderly low cost housing in Chongging.

As provincial governments and city councils assume powers the NDRC had in the past, the decision-making process will become more decentralized. This may bring about positive changes, as it should clarify which level of government is responsible for interpreting laws and regulations and approving projects. It is equally possible that the transition of power to the local level may have a negative impact on construction in areas of China.

The new organizational scheme places the Ministry of Construction’s urban public transport management functions under the new Ministry of Transportation.

The aim of the restructuring and creation of ’super ministries’ is to improve regulation, rule of law, and adherence to a market-based economy while simultaneously curbing corruption, decreasing pollution, and cutting down on turf wars between ministries and disparate sectors of the bureaucracy. All of these are long-standing objectives of the central government.
Source: Mondaq

An industry report released by the Shanghai Real Estate Association concludes that while nationwide investment into the real estate industry grew rapidly over the past year, domestic supply of small- and medium-sized apartments still remained inadequate almost two years after the 70/90 policy was introduced.

The report, conducted annually by the China Real Estate Association, said the speeds of sales of small- and medium-sized apartments indicated a great shortage of such products.

The report said, ‘Statistics compiled in 40 major Chinese cities between January and December last year has found that approved space for presale and registered sold space for apartments below 90 square meters in size both accounted for about 25% of the total, which means a full digestion of such products through the past 12 months,’

In May 2006, the Ministry of Construction announced that the combined GFA (gross floor area) of all residential units below 90 square meters in size should account for more than 70% of the total GFA of a project.

The policy, applied to residential developments that were given approval to commence work after June 1, 2006, was designed to raise the supply of small- and medium-size homes and discourage construction of luxury houses.

In Shanghai, less than ten ‘70/90′ projects have been released to the market.

Source: Shanghai Daily

Despite reports of doom and gloom from the real estate sector it appears that, in fact, China’s property prices in 70 major cities jumped 11.3% in January from a year earlier, the biggest increase since at least 2005, when records began.

The National Development and Reform Commission said in a statement on its Web site that January’s prices were 0.3 percentage point higher than in December. New home prices surged 12.2% from a year earlier.

At the same time inflation in China climbed to an 11-year high last month which puhed it ahead of returns on bank deposits.

Premier Wen Jiabao pledged to curb ‘excessive’ growth of property prices and spend more to build cheap homes for rent and sale to poor families.
He identified inflation and economic overheating the two top risks facing the world’s fourth-largest economy in 2008 and promised a ‘tightened’ monetary policy to cool prices.

Wang Tao, head of Greater China economics and strategy at Bank of America Corp. in Beijing, said, ‘When property prices continue to rise, it pushes people out of the market and also increases financial risks as real estate lending and investment increase too rapidly, fuelling overheating.
Source: Bloomberg

Four housing projects for families on low incomes in Shenzhen have been started in Futian, seen in our illustration, Nanshan and Bao’an districts. On completion the four projects will provide 16,951 apartments.

Vice Mayor Lu Ruifeng said, ‘So far, there are a total of 24 projects either completed or under construction.’

The projects will provide about 28,200 apartments in total. This year the government had finished 6,006 apartments. Then, from 2006 to 2010, the government will build another 140,000 apartments for low-income families.

Applications for the 6,006 government-subsidized apartments will start from Jan. 14, 2008.

Families who have an annual income of less than RMB23,252 (US$3,168) for the two consecutive years of 2006 and 2007 will be eligible to buy or rent government-subsidized apartments.

The total assets of an eligible family should not exceed RMB280,000.

Single-parent families and couples married before December 31, 2005 will be eligible to buy low-cost government apartments. Families, single-parent families and singles over 37 are eligible to apply for a low-rent apartment.

Moreover, applicants and spouses must hold Shenzhen hukou, or a permanent residence permit, issued before December 31, 2005.

Families who have bought government-subsidized apartments in other cities, will not be eligible for these apartments.
Source: China View

It has actually happened. The miracle. Housing prices in Shanghai have fallen sharply. The reason is that potential buyers are holding back purchase plans in the hope that they can benefit from a new housing policy to increase supply.

The average price of an apartment in Shanghai dropped 6.36% from October to RMB7,731 ($1,043) per sq m last month due to government policies to curb speculation.

Jin Weikang, a 51-year-old worker in a dairy processing plant, said, ‘My dream of buying a bigger house seems closer to reality.’

Premier Wen Jiabao said in a speech at the National University of Singapore on November 19 that China should increase housing supply by promoting low-rent houses and subsidized housing, as well as through market regulations on private housing.

Premier Wen emphasized that subsidized housing should be sold mainly to ‘the middle-class group’.

Cao Jian, a 31-year-old senior manager of a foreign-owned company, said, ‘The soaring house prices once depressed me a lot. But now I am waiting for the launch of subsidized homes, which is said to target middle-class people like me.’
Source: People’s Daily Online