CHAPTER ELEVEN: Property Investing in China

To many, investment in China may seem like a difficult prospect. Apart from language and cultural differences, concerns may range from laws and regulations which may not be transparent, to complicated bureaucracy. However, China has made huge progress since it joined the UN and embraced a market-oriented economy in the late 1970s. The country is opening up to trade, has an increasingly liberal global trade regime, and labour costs are a fraction of what they are in the West. China also showed its openness to progress and development by joining the World Trade Organisation (WTO) in 2001.

A key element of China’s new-found economic freedom has been the introduction of property rights. These property rights include laws which state that the government may not confiscate property without payment of compensation, and allow for claims to be made against the Chinese government (although this is on a reciprocal basis – if the home State of the claimant allows Chinese citizens to make claims this will be allowed, if not it won’t). China also has dual taxation agreements with 78 countries, including the UK (further details of these agreements can be found at www.chinatax.gov.cn/ssxd.jsp).

Due to these developments, China is seeing extraordinary economic growth (averaging approx 9.4% per year between 1978 and 2001). In 2004, the Organisation for Economic Cooperation and Development (OECD) predicted that the Chinese economy would grow by 9.3% in 2005, rising to 9.4% in 2006 and 9.5% in 2007. The total GDP between January and June 2005 reached 6.7…