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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 168

China Business Intelligence No. 168

Samsung Economic Research Institute Beijing Office

Aug. 4, 2010

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Highlights:

I. Economy

The Chinese government' s announcement on regulating new houses on April 2010 froze the property market and brought a consequent downturn in housing prices. But, rental prices recorded a steep increase. This time, seasonal factors, real estate agencies, the dismantlement of residential buildings and a rise in housing prices, normally the contributors to a price hike, seem to have only limited impacts on growth of rental prices. The causes of a rental price hike are the government regulations on housing prices and inflationary expectations. The inflationary pressures can spread to a broader area. However, as high demand is already met to some extent, the rental prices may slightly decline in some areas. To stabilize the market, the Chinese government needs to ensure stability and continuity of regulation policies on properties.

II. Industry

A new regulation called "Supervision over Non-financial Institutions' Payment Services" will step up the legal status of escrow services. The escrow market has continued to grow and is expected to exceed one trillion yuan within the year. There have been growing concerns about the potential risks lurking in escrow payment services. The Central Bank will lay the legal foundations for the escrow industry through the Supervision over Non-financial Institutions' Payment Services, and establish rules to manage customer transaction money. Supervision over Non-financial Institutions' Payment Services, the first installment by the Central Bank, will be followed by detailed sub-regulations.

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