If we stick to State Council No. 24 circular [which says 70 percent of homes must be affordable for average income earners] issued last year, we not only can keep the property market prosperous, but also drive the healthy development of 60 related industries.

Will there be any resistance to cracking down on inflation starting with the property industry?

Of course. Any reform will affect the current profit distribution, and resistance will be unavoidable.

The biggest resistance comes from real estate developers. Their greediness for profit is clearly evident. Last month [June], some Beijing property developers went to Shanxi Province [which is rich in coal and has many millionaires and billionaires] to promote their housing projects. They showed that they were building houses for rich people to invest in and speculate on in Beijing.

Some resistance comes from rich people who have already bought a number of houses and are waiting for home prices to surge to engage in arbitrage.

Banks are also likely to oppose the property market correction. Currently, about 80 percent of the money invested in property is borrowed from banks. Hence, the banks and property developers have become joint stakeholders. Under such circumstances, it is even harder to correct the real estate market.

Local officials and those who are corrupt also will resist. The property industry has become a pillar industry in some provinces. The higher home prices are, the higher the local GDP will be. Some developers often bribe local officials in an attempt to maintain higher home prices at the administrative level. As a result, those people will be sparing no efforts in obstructing the property market correction.

With so many obstacles, what kind of actions should be taken?

Bringing housing prices down is the key to resolving this round of inflation. We should take the following measures. First of all, we should pass legislation on land supply. We must strictly separate commercial houses from affordable houses, and make sure ordinary citizens can have a place to live.

Second, the government must crack down on those who stock up on land to gain larger profits. For instance, after a real estate developer purchases a piece of land, if he fails to begin construction within half a year, he will be fined, and his land will be confiscated if he does not start building within two years.

Third, the government must control bank loans for property developers. Those with little cash flow should not get loans from the banks. The banks, however, should lower their interest rates for average-income buyers and serve the people at large.

Fourth, we can learn from developed countries and cut relevant taxes for or subsidize first-time homeowners.

Fifth, the government should restrict speculative home investments as well as hot money investments in the real estate market. Those who buy homes in other cities should be strictly controlled.

As long as relevant government departments take the property industry more seriously and prevent bribes and corruption, China can certainly bring its property market and inflation under control.