China is tightening regulation on foreign investment in the real estate sector to crack down on speculation, according to a statement from the Ministry of Commerce (MOC) on Thursday.

The ministry urges local authorities to increase checks and supervision on property investment that involved foreign investors and strengthen risk controls on the sector, said the statement posted on the MOC web site.

According to the statement, foreign-funded developers are not allowed to make profits through buying and reselling real estate projects, which will be strictly monitored by the MOC along with the Ministry of Land and Resources and the State Administration of Foreign Exchange.

The ministry also required local authorities to tighten scrutiny over foreign-funded investment companies and not to allow those companies to enter the real estate businesses, while closely examining the exact amount of foreign funds used in new real estate projects.

Foreign direct investment (FDI) into China's property sector jumped 48 percent to $20.1 billion in the first 11 months of this year, compared to a 17.73 percent growth in the total FDI in the same period, according to earlier MOC data.

China introduced a group of measures to crack down on property market speculation and rein in skyrocketing home prices since the beginning of this year, including prohibiting the issuance of mortgage loans for third home purchases and raising down-payments.

The government is also guarding against possible "hot money" inflows that might complicate China's policy to fight inflation.

Property prices in 70 major Chinese cities rose 0.3 percent in November, month on month, and 7.7 percent year on year, according to the National Bureau of Statistics.

(Xinhua News Agency December 24, 2010)