Steve Dickinson is right.

That’s usually a safe statement to make no matter the subject, and his comments yesterday on real estate are no exception to the general rule. I’m not a real estate lawyer, and I don’t play one on TV, but I do like reading about it once in a while since it impacts a lot of other areas. Moreover, you can’t be a good corporate FDI lawyer in China without knowing the basics.

Things were already getting quite tight for FDI in the real estate sector, but the recent NDRC supplement to the foreign investment catalog goes even further in adding restrictions.

As I said earlier this week, this is all about industrial policy, and the use of legal tools to support economic goals. Case in point: the real estate sector has been overheating for some time. It has been one of the top domestic investments of choice and a magnet for hot money inflows for years. Not so good when you are trying to maintain a fixed exchange rate. Asset inflation is not a desirable thing when prices go up precipitously like this - ask someone from Tokyo, or Hong Kong - what goes up often comes right back down, and not always with a soft landing. The Shenzhen market is starting to see this, although it’s anyone’s guess as to how bumpy that landing is going to be.

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