With its property prices fluctuating wildly, Shanghai has been designated as a testing ground for a more centralized, and hopefully more effective, vertical land administration system.

 

This was one of a series of moves, taken last week by central government agencies, to further regulate the land and housing market. It follows public complaints of rising housing prices in major cities and shady deals in the real estate market.

 

The Ministry of Land and Resources last week pledged that it will rebuild its administrative system according to the central bank model, namely by setting up a certain number of regional bureaus (nine in the ministry's case) reporting directly to its central office in Beijing.

 

At the same time, the Ministry of Construction, another key regulator of the land and real estate market, openly reprimanded 10 land developers and related firms for their attempts to defy industry rules.

 

The central government urged all cities, from medium-sized to major ones, to turn over their housing development programs before the end of the year, as was required in the middle of the year.

 

Starting from January 2007, according to a central government decision also adopted last week, inspection teams will be dispatched nationwide to evaluate the implementation of current policies.

 

In the case of the Ministry of Land and Resources, the other eight bureaus to be established will be in Beijing, Shenyang, Nanjing, Jinan, Guangzhou, Wuhan, Chengdu and Xi'an. They will form a nationwide regulatory network with Shanghai.

 

The ministry's Shanghai bureau is commissioned to oversee land issues in Shanghai, along with those in Zhejiang and Fujian provinces, with an emphasis on Ningbo and Xiamen, two coastal cities which have also seen rapid housing price rises.

 

But setting up all nine regional bureaus will be, according to a ministry official who did not want to be named, "a gradual process." There is no need, he told China Daily, to set up all of them at one time.

 

For the last couple of years, Beijing has been trying many ways to slow down investment in fixed assets (of which housing is a major item) and to control illegal activities in land-related business deals.

 

But until recently, land supervision had been considered to have many loopholes. In order to attract business investment, many tracts of land involved only small payments or even zero land-use fees, according to the ministry's Vice-Minister Li Yuan.

 

The regional bureaus, whose directors will all be appointed by and answer directly to the ministry, will serve to supervise the legitimacy of all major land-use plans by local governments. They will report to Beijing all breaches of land use regulations, and the measures to be taken to redress the problems.

 

Since mid-2006, one policy after another has been introduced to stabilize the land and housing market. In July, there was a cross-the-board increase in the down payment rate for commercial housing.

 

In early November a regulation issued by the ministry, to be effective as of Jan. 1, 2007, doubled the acquisition price of arable land for urban development projects.

 

The shortage of land is most acute in Shanghai. The city's per capita amount of land is one twentieth of the national average.

 

According to Shanghai municipal government, the city is exploring new ways to strengthen land control and management. It plans to introduce stricter land regulation and make better use of available land.

 

(China Daily December 4, 2006)