Chinese Cabinet Decrees Halt to Real Estate Speculation

China has announced strict measures to halt chaotic property speculation, including an outright ban on projects such as golf courses and horse-racing tracks.

“There will be no approval of, no license, no land and no loan for such expensive projects as horse race tracks and golf courses,” said the State Council, China’s cabinet.

The official Xinhua news agency said the State Council decreed seven administrative measures as part of chief economist Zhu Rongji’s plan to bring property speculators to heel.

Property development has become a national--and highly profitable--obsession in China, soaking up billions of dollars in questionable state loans which officials now say should have gone to industry, housing and agriculture.

Zhu, a powerful vice premier who doubles as central bank governor, has named property and securities speculation as key targets in his efforts to cool China’s overheating economy, recently expanding at a rate of about 14% a year, and snuff out urban inflation running at more than 20%.

He said last month all such “improper” loans must be returned by Aug. 15 and vowed to punish bankers and local officials who failed to comply with his decree.

Xinhua issued a frosty reminder that China was still a socialist state, despite a giddy decade of capitalist experiments, saying flatly: “In China, all land is owned by the government.”

The new measures bar banks and land administration units from running property companies and impose strict limits on the amount of land that can be leased for property development.

The decrees said property investment must have the primary goal of promoting key industry and infrastructure projects and the construction of housing for urban Chinese. They placed sharp curbs on just about everything else.

“For buildings with limited market potential, such as villas, holiday villages, luxury apartments, hotels and office buildings, the country will place strict limits on this area and halt the construction of some buildings already in progress,” Xinhua said.

Local governments must convert “improper” property projects into workshops, standard apartments and buildings for commercial and service purposes. Projects that cannot be converted “should be halted resolutely.”