The Beijing Dalong Weiye real estate company lost 200 million Yuan deposit fee to the government after it failed to proceed with the purchase of a piece of land it bid for 5 billion yuan in suburban Beijing last year. This has provoked a hot discussion in the industry. Some say it seems this time the government is taking real actions to monitor the real estate market in a new way.

Let's take a closer look with reporter Liu Min.

 A vast piece of desolate land is quietly waiting in the cold wind in Shunyi district of Beijing. A local resident says no one has ever been to do anything to the land since it was auctioned last year.

"It used to be an area of residential houses, but was dismantled last year, but since then no one came to build anything new. Around it is all villas and high-end communities."

In November, 2009, Dalong Estate won the bid for this piece of land in Beijing's Shunyi district and rewrote the record on land purchases at 5.05 billion yuan for the plot. But the company later failed to present the payment on time and didn't sign any further contracts with the local government. The company thus lost a 200 million deposit due to this and was disqualified for other land auctions. This is the first time the Beijing municiple government takes back an piece of auction land.

Vice President of China Real Estate Market Research Association Gu Yunchang says this shows the government now is monitoring the market with new methods.

"In the past a few years, the government usually monitors the market from the demand end. But this time, the government started to monitor the supply end. They auctioned many pieces of land last year to increase the supply on the market, in order to further adjust market price levels. But some property developers kept the land in hand without starting construction, waiting for the land's price to climb in order to make more profit. It's not good for property prices in the real estate market to stay stable."

According to the company's profit report, their annual net profit is only 294 million Yuan, which means the five billion yuan land will cost those 17 years of net profit to meet the balance. Such unqualified property developers usually accumulate funds through the stock market by bidding for high price land. When they push a piece of land up to an astronomical price at the auction, their stocks in the market will surge rapidly, accumulating more than enough funds to continue their projects.

But such behavior not only tends to endanger the real estate industry, but also puts stockholders' money in jepardy. Once the market bubble explodes, the whole country's economy would be affected. Facing such hidden dangers in today's Chinese real estate market, what would the government do?

Vice minister of Land and Resources, Yun Xiaosu,

"There are two kinds of solutions on adjusting the floor price of the market. The property developers can still compete for the land, but the price of the property is then set at a fixed price. The second solution is, the developers have to offer the best development plans to buy the land. So even if one's plan is good but with a lower price offer, the land can still go to them."

Recently, other local governments such as Nanjing has warned banks to halt lending money to home buyers by claiming that the quota for January has been fully used. Eight developers including Dalong have not been allowed to purchase new land due to their delay in payments or contract signing, which was also a sign of the government's action to rein in the overheated land trading and property market.

For China Drive, I'm Liu Min.