2011-01-05

Is China finally serious about the property bubble?

Maybe, now that the leadership is looking directly at the problem.

Property a local government money bin

In a nutshell, here's how it works. The central government tells the local governments to cool property speculation. Except the local governments get most of their money from selling land, and some of the bureaucrats are likely participating in some of the developments as well.
Hu said Wen had lost the bureaucratic battle because any property project involved officials from dozens of local departments - and even more than 100 in extreme cases - with everyone involved pursuing their own vested interests.

"Neither Wen nor any other top central leader could monitor so many departments and officials to ensure his policy is executed," Hu said, citing a research report that suggests that corruption accounts for at least 20 per cent of the cost of mainland housing.

"And the root problem comes from a political system where local officials wield discretionary powers without checks and balances from an independent legislature, judiciary and press."

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