China: Overview

RENTAL YIELDS

Last Updated: Feb 26, 2009

Chinese yields average 4.42%

In China gross rental yields on apartments average a modest 4.42%, based on our sample of high-end used apartments in five prime cities - Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen.

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TAXES AND COSTS

Last Updated: Dec 10, 2008

Taxation differs in each municipality in China

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	5%	5%	5%
Click here to see a worked example
Source:			Disclaimer

Rental Income: In general, leasing property is subject to business tax, individual income tax, and real estate tax. In Shanghai, gross rental income is taxed at an integrated rate of 5%.

Capital Gains: Net gains from transfer of property are taxed at a flat rate of 20%.

Inheritance: There is no inheritance or gift tax in China.

Residents: Rental income earned by resident individuals is taxed at a rate of 10%.

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BUYING GUIDE

Last Updated: Nov 16, 2006

Buying costs are moderate in China

Total round-trip transaction costs are around 4.86% to 13.65% of the property value. Most of the costs are shouldered by the buyer, including the 3% - 5% Deed Tax and Business Tax of 5%. There are three procedures needed to register property which is usually completed in 32 days.

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LANDLORD AND TENANT

Last Updated: Jun 19, 2006

Chinese law is pro-landlord

The Chinese system is generally pro-landlord.

Rent: There is no rent control in major centers such as Beijing, Shanghai, Guangzhou, and Shenzhen. Rent adjustments are subject to the provisions of the contract.

Guaranty Money: The landlord typically collects guarantee money (security deposit) of two to three months rent on top of a month's advance payment. If the tenant prematurely terminates the contract, he loses the guarantee money and down payment.

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ECONOMIC GROWTH

Last Updated: Oct 01, 2009

Growth slows due to exports

China, once called the Sleeping Giant, is one of the world’s fastest growing economy. With 1.3 billion people, it is the most populous nation and the second biggest in land area. Its economy, currently among the biggest in the world, is expected to overtake that of the US within a decade.

China saw economic reforms under Deng Xiaoping after more than two decades of stagnation under the authoritarian rule of Mao Zedong. In the early 1980s, collective farming was dismantled and private enterprises were allowed to flourish.

Growth in the Chinese economy slowed to 9% in 2008 after posting a record 13% GDP growth in 2007. Prior to the global financial crisis, growth in the economy was slowing due to the tight monetary policies implemented by the government.

Due to the drop in foreign demand, growth in Chinese exports slowed to 17% in 2008, according to NBSC. Growth in imports also slowed to 18%, due to the falling consumer confidence and uncertainties in the economy. To support the export industry, the government has been keeping exchange rates stable at CNY6.83 per dollar from July 2008 to August 2009. Foreign exchange reserves grew by 18.7% to US$2.13 trillion in June 2009 from a year earlier.