【正文】 REAL ESTATE MARKET OF CHINAReasons for Growth Reform of China’s real estate sector did not take place until the late 1990s. Prior to that time, most of China’s urban population relied on the State for housing. Ownership of real property rested in the State, and property development was the responsibility of the State. However, starting in the early 1990s, China’s housing system began to transit to a market driven system.A brief timeline of housing reforms is as follows: YearEvent1988Amended constitution to permit transfer of land use rights1991Employer/employeefunded housing provident funds menced 1992Public housing menced to be sold off in major cities1995Regulations issued regarding sales and presales of real estate, setting forth a framework for real estate sales1998Abolition of Stateallocated housing1999Maximum mortgage terms extended to 30 years and maximum finance increased to 80%Formalized procedures for the sale of real property in secondary market2000Regulations issued to standardize quality of construction projects, setting forth a framework for the administration of construction quality2001Shanghai bee first Chinese city to eliminate dual pricing for domestic and overseas home buyers, and Beijing to follow in 2003Regulations issued to strengthen the administration of demolition and relocation in urban areas2003Strengthened administration of real estate loans (to reduce risk of banks regarding real estate bank loans and prevent continue overheating of investment in real estates)Notice issued by the State Council for sustained and healthy development of real estate market2004Regulations revised to prevent transfer of apartment units before land use rights certificates for such units are issued (to slow down property speculations) For details of the regulations published between 2001 and 2004, please refer to “Regulatory Overview – []” in Appendix [IX] to this Circular.The housing reforms promoted private home ownership, development of the mortgage market and the liquidity of the secondary property market. The Stateallocated housing system was abolished in 1998, and workers were allowed to purchase the properties that they were living in at a discount. To assist the workers in acquiring the home ownership, the home mortgage market was relaxed, and bank loans were more easily available to individual home purchasers. Around the same time, procedures for the resale of properties were formalized. By [2001], people in most cities of China were no longer subject to a regulatory lockup period on resale of properties. All of these reforms, together with the continued macroeconomic growth of China, the rise of middleine families and the demand for improved living standards, as well as the increasing pace of urbanization and largescale city redevelopment, are key growth drivers in China’s real estate market. According to the United Nations Development Program Human Development Report 2003, China’s urbanization rate was expected to reach % by 2015. The expected increase of China’s urban population is likely to create significant demand for housing. The government estimates that billion . GFA of new housing will be needed nationwide by 2010 in order to meet new demand from new urban residents, assuming average per capita living space GFA of 25 .. An additional billion GFA will be required to increase average per capita living space to 25 . per capita by 2010. The government estimates that another 11 billion . GFA of new housing will be needed nationwide by 2010 to replace old housing stock. For figures on China’s rising macroeconomy, urban ine level and urbanization rate, please refer to “Industry Overview – Macroeconomic Situation of China”.Growth of Real Estate Market According to the National Statistics Bureau, a total of approximately 322 million . GFA was sold in China in 2003, and the total GFA pleted in the same year was 325 million .. Such figures represented an increase of % and % from the relevant figures in 2002. Approximately billion was generated from the sale of real properties in China in 2003, which represents an increase of 34% from billion in 2002. The table below sets out figures showing total GFA pleted, GFA sold and sales volume generated during 1998 to 2003:199819992000200120022003GFA pleted (m2 million) GFA sold (m2 million)Sales volume (RMB billion)(Source: National Statistics Bureau)According to the National Statistics Bureau, approximately RMB 1,010 billion was invested in China’s real estate sector in 2003, which represented approximately % of China’s total investment in fixed assets in 2003 and an increase of approximately % from 2