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China's expected accession to the WTO in late this year or early 2002 will have a positive impact on China's real estate market as a result of increased business activity and the more systematic development of China's economy. As China's economy grows, more and more people can afford cars and housing. This will not only provide enormous business opportunities to foreign investors, but also means that China will need to follow international practice standards. China will play an increasingly important role in the flow of international real estate investments, both outward and inward-bound though it is likely that the impact will be gradual and unevenly spread among different regions.
To address issues associated with WTO accession, Chinese lawmakers ought to either make new legislations and regulations, or change the current ones, so they can fit the new market requirements and situation. An estimated 1,400 laws and regulations need to be modified in order to keep in line with the WTO standards. Last November, a delegation sent by the China's Ministry of Construction visited Washington DC to learn the relevant laws and regulations in the U.S. This is where U.S. real estate professionals with more experiences and knowledge in real estate business can work with China's counterparts to create a market structure in China.
Traditionally, housing in China is segregated in two sectors. One is built and sold to foreigners, the other for locals. Though the quality and services may be higher for foreign purchasers, the housing is usually much more expensive. To be prepared for the WTO entry, the Ministry of Construction is currently working on creating new rules and eventually combines the two separate sectors together. A group of experts have studied the case and made some recommendations. For instance, they suggested the government should establish new rules governing land supply, price equality, rights and buyer qualifications to reach the goal of merging the segregated housing markets into a single one. They also suggested the government could consider to standardize the housing service sector in line with international practice in the hope of increasing competitiveness after China's WTO accession. Some discrimination against foreign nationals and exclusive foreign investments should be revised or removed. There is a great demand in China to build infrastructure and to provide more housing for the world's largest population. These needs translate into opportunities for U.S. companies to help provide such services using their experiences and knowledge. Though the resale housing market is still in infant stage, it will have a realistic potential to grow into a huge market in near future. With the fast-moving course of events in the Chinese economy, it is only natural to assume that more U.S. real estate companies, both development and brokerage firms, will sooner or later involved in the development of China's real estate market.