Put a Stop to 'Real Estate Corruption' & Advocate 'Five Openness', Economist

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Last updated at: (Beijing Time) Sunday, July 20, 2003

Put a Stop to 'Real Estate Corruption' & Advocate 'Five Openness', Economist

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"The corruption in real estate dealings tends to bring about the financial risk in banking business," expressed Wei Jie, a noted economist. To prevent the financial risk in the banking business a work of great importance that must be done is to reduce to the maximum extent the influence by political power over the real estate dealings.

Since 2001, the call for "putting a stop to 'real estate corruption' has become louder and louder. By means of making an exchange of political power and money a piece of land of an extremely high value is got by paying only a little price. The gold digging in such a way is not only unfair and in violation of the law but rather it has aggravated the financial risk due to its large sum of loans from the bank.

"Any secret dealings are afraid of being brought to light." To expose and solve the filthy dealings between the political power and money, holds Wei Jie, has to be carried out by way of "Five Openness".

The "Five Openness" Wei Jie referred to are: the whole process in real estate dealings, the creditability of the real estate dealers, the economic source for the realty dealings, the fund structure and the way of payment must all be made open to the public.

The land property should be made to enter the market by auction instead of approval by authority. Only by ensuring an overall openness can the under-table power and money dealings in the real estate business be curbed and solved. The result of "playing empty-handed" between power and money will only hurl the whole risk onto the banking business if otherwise.

Actually, at the beginning of this year the central bank has already brought out an opinion of adjusting the crediting policy for the real estate business, in which it tipped clearly an inclination for an active prevention against the financial risk of the bank. The debut of the policy was taken right on the ground of many unhealthy phenomena occurred in real estate dealings, holds Wei Jie.

At present, the enterprise capital in China's real estate realm is at a popularly low level. In this situation the transaction in real estate business will turn right into a financial risk in the banking business once problem occurs.

And in the meantime, some false endorsements in fraud for loans have already been exposed. The extremely speedy accumulation of fortune in the real estate domain has already surpassed by far the average rate of interest n society, showing a very high rate of non-occupancy of houses and contracts left unexercised are something common to find.

"Don't bring yourself into winter", this is an appeal made by some economists in regard with the real estate dealings in China. To prevent the real estate foam from being changed into financial risk in banking business the wiping-out of the real estate corruption is only one of the steps. To make a healthy run of the real estate business it is of great importance to practice a certain sort of monitory policy, reform the operational system, continue to keep and kick off the demands for realty business while the behavior of the dealers must also be self-disciplined.

By Han Rongliang, People's Daily Online

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