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BEIJING-The Chinese Government has released proposed rules to limit foreign investment in real estate as part of a package of measures intended to cool the surging economy, the official news agency of the government says.
The government has tried to rein in an investment boom by raising interest rates, tightening lending rules and banning some construction projects outright. Officials are concerned that excessive spending on assets could fuel inflation or cause financial problems for banks if deeply indebted borrowers default on loans.
Under the new rules, foreigners would face "restrictions on residential property purchases," the Xinhua News Agency says, without giving details. It says developers would be required to invest more of their own money in projects to reduce heavy borrowing.
The rules are meant to "improve the efficiency of using foreign investment," Xinhua says. It didn't say when they would take effect.
China has had limited success in attempts to control frenzied building of factories, luxury apartment and other projects that have turned its cities into massive construction zones. Figures released by the government last week showed the number of new construction projects jumped by 22.2% in the first half of the year, fueling an 11.3% rise in economic growth in the second quarter, the highest rate in a decade.
Investment from Hong Kong and other sources outside China's mainland has poured into real estate. Investors hope to profit from rising prices and an anticipated rise in China's currency which would push up the value of mainland assets in foreign currency terms. The government raised interest rates in April, and economists expect another rise in response to the latest announcement of strong growth figures.
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