How China's Corruption Crackdown Could Kill The Property Boom

Beijing China Property

The Chinese government released massive corruption findings on Thursday related to its massive $586 billion stimulus program enacted during the economic downturn.

It’s not that corruption related to the stimulus programs is particularly surprising, but that A) it’s being cracked down on (you’ll be lucky to see major public corruption crackdowns in many places), and B) much of the abuse was related to Chinese property.


A total of 3,058 officials, including several mayors, received penalties ranging up to life in prison for offenses related to the stimulus or to construction projects, said a deputy minister of the Ministry of Supervision, Hao Mingjin, at a news conference.

“We will tackle corruption with a heavy fist,” said another official, Fu Kui, head of the ministry’s enforcement department. “Today, with many corruption cases likely to happen, if we don’t take tough measures, it will be hard to suppress this.”

Mr. Hao described 20 cases that they said were representative and many stemmed from officials taking bribes to approve real estate projects. Real estate is a frequent source of corruption in a system where the government owns all land and building permits can be lucrative and hard to obtain.

To what degree has corruption fuelled China’s real estate boom? To us this sort of bribery crackdown is yet another form of regulatory tightening vs. property prices. One has to wonder what percentage of new projects lately have involved unsavory officials who might suddenly become gun-shy after watching their peers pilloried.

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