approximately $1.4 billion worth of Shanghai real estate, surging 84 percent from a year earlier. Major foreign purchases in Shanghai's property market included the Carlyle Group's $280-million acquisition of a service apartment; South Korean Mirae Assets Financial Group's purchase of $136 million worth of property; and U.S. Blackstone Group's purchase of an 80-percent stake in Changshou Commercial Plaza for $147 million. Service apartments were the top choice.

During this time real estate developers had increasingly felt the pressure of capital shortages since the central bank tightened the country's money supply. Small developers had been forced to merge with or be acquired by larger rivals. And property prices in some cities such as Shenzhen had fallen about 30 percent since the peak.

Chen Wei, an analyst with CB Richard Ellis China, predicted that the housing market in Shanghai would remain inactive due to a wait-and-see attitude among consumers and a capital shortage among developers. But he said he was certain that home prices in Shanghai would not decline substantially.

The Urban Financial Research Institute of the Industrial and Commercial Bank of China Co. Ltd.'s public report confirmed CB Richard Ellis' statement. The report, issued on July 8, said housing prices across the country were likely to drop in the short term, but that increasing investment by foreign institutions might trigger a new round of price surges in major cities.

Play by the Rules

Local authorities in Hangzhou, capital city of Zhejiang Province, fined a local Louis Vuitton (China) Co. Ltd. boutique 462,500 yuan ($66,071) because it failed to comply with Chinese rules that handbag manufacturers should include a small information tag on their products.

On June 6, the Zhejiang Administration of Industry and Commerce said handbags sold by the Louis Vuitton boutique in Wulin Square were defective. It confiscated 556 items and temporarily closed the store.

The administration said the handbags did not have a small leather tag indicating the material they were made from. It made no mention of the quality of the bags.

On June 16, the store resumed operations. Louis Vuitton responded positively to the government investigation. Although it argued that its leather products in France did not have to attach the product information tag, it said it would adhere to rules in local markets.

Zhao Xiaojing, Luis Vuitton's director of communication, said the company would continue an internal investigation of the matter and would decide if its stores in other Chinese cities should add the product tags. The company would take immediate action to ensure its products met Chinese standards, she said.

Zhang Hanlin, President of the WTO Research Institute of University of International Business and Economics, said in an interview with CCTV that as international trade friction becomes more frequent and intense, both foreign brands sold in China or Chinese brands sold abroad should adhere to the same product rules without exception.

Slow Auto Sales

Auto manufacturers have seen their sales growth rate slow down because of surging oil prices.