Soon after the NPC (the National People’s Congress) and CPPCC (the Chinese People's Political Consultative Conference) sessions, during which the top authorities expressed concerns over housing prices and possible intentions to control the property bubble, Beijing's land prices reached record highs, and the biggies shareholders of the winners in the recent three biggest land auctions were all state-owned firms.
In response to this phenomenon, on March 18, the State-owned Assets Supervision and Administration Commission (SASAC) urged the 78 centrally administered State-owned enterprises (SOEs) , whose major business was not property development, to come up with plans for withdrawing from the real estate sector in 15 working days.
Since 2003, the SASAC has been reorganizing the businesses of the SOEs. It previously approved 16 centrally administrated SOEs to run real estate developments as their major business. However, 78 other SOEs are also engaging in this business, sometimes under the name of their subsidiaries. According to SASAC's order, the 78 SOEs' businesses will be reorganized and they must withdraw from China's real estate industry once their current property projects have been completed.
The issuance of the order on March 18 is not the first time the central government has tried to reorganize the SOEs' business and to transfer certain business to firms it believes to be more efficient. Earlier this year, in January, the SASAC ordered the SOEs whose major business is not property development or travel industry, to withdraw from the hotel industry.