The Chinese economy is growing so fast it risks overheating,
according to a research report produced by the Macro Economy
Research Institute of the National Development and Reform
Commission.
The report released on Thursday says the nation's macro economic
control efforts should focus on diverting excess liquidity to
sectors that are in urgent need of industrial upgrading and to
social undertakings.
The report also stresses that major policy shifts are needed in
China's real estate and export activity sectors, where growth is
too quick.
China's mounting liquidity is fuelling real estate development
projects in economically dynamic Beijing, Shanghai, Jiangsu,
Zhejiang and Guangdong.
Housing prices have surged to the point where the general public
is very annoyed. The constant price inflation in the real estate
sector has had a negative impact on industrial upgrading and
urbanization and widened the income gap.
The report says that macro economic control should not focus on
reducing excess liquidity but on diverting it from the real estate
sector.
The report suggests that central and local government should
stop treating the real estate sector as a pillar industry.
Residents should be discouraged from owning more than one flat.
Before the industrialization and urbanization drives are
completed, policies should be made to cap development of real
estate projects. Estate tax should be levied on homebuyers and
profiteering taxes on property developers. Income tax on earnings
from housing transfers should be raised to 50 percent from the
current two percent, in a bid to curb undue speculation in the
sector, according to the report.
The report also suggests that measures, such as reducing tax
rebates to five percent in the next two to three years, should be
taken to curb undue growth in exports.
(Xinhua News Agency April 27, 2007)