Real barriers to investment

By Joanna Law.

The once thriving Chinese real property market is now hushed. Individual buyers' appetite for housing is waning and big corporate developers prefer to conserve cash. Housing prices in cities such as Shenzhen and Beijing have plunged dramatically.

    The government clearly needs to stimulate activity in the real estate market, and there are some encouraging signs. Officials have been promoting a series of stimulus measures, including the reduction of tax and down payments, and in December 2008, the central government issued Circular 131 asking local governments to implement real estate policies to improve the local markets. Nanjing, Shanghai, Chongqing and Tianjin have been showing more positive attitudes towards foreign investment, on which those cities rely heavily.