China’s securities regulator, the China Securities Regulatory Commission (CSRC), has launched a pilot scheme aimed at boosting private investment in the country’s real estate sector. The scheme is expected to raise at least 30 million yuan ($4.37 million) in its first round, with institutional investors being asked to offer no less than 10 million yuan each to participate.
According to the CSRC, the pilot program will focus on investing in residential and commercial housing and infrastructure projects. It is also designed to encourage foreign investors to participate through an inbound investment program called the Qualified Foreign Limited Partnership (QFLP).
The QFLP program is aimed at allowing foreign investors to invest in China’s domestic market through a limited partnership, which also provides them with certain tax benefits. This is part of China’s ongoing efforts to open up its domestic markets and attract more foreign investment.
The pilot scheme will provide more opportunities for funds to participate in the delivery of new homes and in mergers and acquisitions of real estate assets, said Yan Yuejin, an analyst at the Shanghai-based E-house China Research and Development Institute. It will also assist some property developers in disposing of non-performing assets by offering capital support, Yan added.
The Chinese government has been implementing measures to cool the property market, including tighter regulations on mortgages and property purchases, to prevent property prices from spiraling out of control. The pilot scheme is expected to provide a boost to the real estate sector, which has been facing difficulties in securing funding from traditional sources such as banks.
The scheme is a part of a broader push by Chinese regulators to encourage private capital to flow into various sectors of the economy. The government has been promoting innovation and entrepreneurship, with policies to support small and medium-sized enterprises, and to encourage the development of high-tech industries.
The CSRC has emphasized that the pilot scheme is part of a long-term strategy to establish a sound and healthy investment system for the real estate sector. The regulator will continue to monitor the progress of the scheme and make adjustments as necessary to ensure its success.
Read More: