By Rong Xiandong (chinadaily.com.cn)
Updated: 2007-07-24 15:30

The National Development and Reform Commission (NDRC), China's top economic commission, proposes to reform the current housing sales system by replacing the current forward delivery system with sales of ready houses, in a move to promote effective housing supply.

The commission's Macro-economic Institute said in a research report that the government will consider piloting the reforms in a few Chinese cities where house prices have kept soaring.

Property prices in the country's 70 large and medium cities rose by 7.1 percent on a yearly basis last month despite the government's efforts to cool down the market, NDRC said yesterday.

Beihai, Shenzhen, Nanjing and Beijing led the country in terms of price increases, with growth rates of 15.5 percent, 13.9 percent, 11.3 percent and 10 percent, respectively. Beihai, a small city at the southern end of South China's Guangxi Zhuang Autonomous Region, has been at the top of the list for four months in a row, reflecting the strong growth in second- and third-tier cities.

In coordinated moves, the institute suggests property tax as well as higher loan interest rates and down payments for residents' second apartments, in an effort to curb skyrocketing property prices in the country's sizzling real estate market.

Special coverage: Housing in China  Related readings:  Property prices up 7.1% in major cities  Guangzhou property prices hit new high in June  Property price growth in May quickens; Up 6.4% on year  Housing a big problem over urbanites' heads

Laws and necessary administrative measures have also been suggested to severely clamp down on realty developers' speculative actions.

The government was also advised to raise the interest rates for bank loans and bank reserve ratios several times by a small margin in the second half of the year, in order to make a dent in surging demand for capital amid a sizzling economy, according to the report. Experts from the NDRC institute note that the value added tax can be collected by the central government rather than by the local governments in order to limit conflicts of interest between investment projects and the local government's interests.

The experts believe that the move is conducive to reducing excessive capital liquidity and yawning trade surplus and curbing investment growth.

The government should support key industries and enterprises in their efforts to save on energy by working out relevant fiscal, tax, and pricing measures in order to support the country's goal of energy saving, according to the experts.