China to order some state firms out of real estate

BEIJING, March 18 (Reuters) - China plans to order many of its largest state-owned enterprises out of the real estate business to help cool urban housing price rises, the Xinhua News Agency said on Thursday.

The plan is a potential blow to many state-owned enterprises (SOEs) which rely on property investments to pad out their earnings.

The State-owned Assets Supervision and Administration Commission, or SASAC, would require 78 centrally administered SOEs whose core business was not property development to withdraw from the business, spokesman Du Yuanquan told a media conference.

Many Chinese SOEs have property arms and can use their connections to get access to government land sales, yielding strong returns when other business units are flagging.

China's largest steel mills often use their property units to help get better returns on their construction steel output.

Rising housing prices are a hot topic among Chinese city-dwellers, especially recent graduates and young couples who fear they will not be able to afford their own apartment.

SASAC gave no specific timetable for the withdrawal, which Du said would come after current real estate projects were finished.

Sixteen centrally administered SOEs would be allowed to continue in the real estate business, Xinhua said, including China National Real Estate Development Group and Poly Group, China's largest weapons trader and art auctioneer.

(Reporting by Lucy Hornby; Editing by Paul Tait)