Chinese Turn to U.S. for Advice on Real Estate : Reforms: L.A. seminars were a primer on the industry, which is among those most affected by China’s economic changes.

Until recently, a posh real estate development such as Laiwu Bay Vacation Village, planned for a site near Shantou in China’s Guangdong Province, would have been unthinkable.

But Zheng Zhuqin, a Chinese real estate manager visiting Los Angeles recently, said his state-owned company is aggressively developing the southern coastal resort, complete with luxurious villas, department stores and recreational facilities.

The project reflects China’s near-revolutionary economic reforms, which include loosening restrictions on commerce and allowing private participation in many aspects of the economy previously under tight government control.

Real estate is among the areas where the impact of reform is perhaps most dramatic.

The government’s decision to allow private development has set off intense speculation in property. From Shenzhen to Shanghai, both Chinese and foreign investors are scrambling for real estate deals--bidding prices up sky-high in some areas and making some people instant millionaires.

To keep a handle on the rapid changes taking place, the Chinese have turned to advisers in the United States to learn about the free-market world of real estate.

The central government still officially owns all property and plays a major part in deals. But although China’s new real estate industry is not pure capitalism, private developers can bid for the right to rent land for up to 70 years for their development projects.

“We want to learn about the real estate of America because we don’t have the experience,” said Zheng, a manager and legal adviser for Shantou Youth Council Real Estate Developing Co. He was one of 30 real estate managers, engineers and company directors in the group attending dozens of seminars in Los Angeles last month to hear about U.S. methods of construction, real estate financing and management.

Chinese officials realize that state-controlled developments have resulted in low-quality housing and have created a tremendous financial burden on the state, said Nicholas Lardy, a specialist on the Chinese economy at the University of Washington. Now “they’re determined to convert much of it (to private developers) over the next two to three years,” he said.

The government has also recognized that China’s current system of tying workers’ housing to specific jobs is a damper on economic development, because it limits the mobility of workers, Lardy said. Private development will “separate employment from housing,” he added.

But the government’s decision to use the free market to accomplish its goals also means officials have a lot to learn about the process.

“One of the main interests is to learn from the American real estate industry--everything, down to the infrastructure, architecture, planning, design and management,” said Zhang Zhihua, a manager with Zhanjiang Real Estate Development Co. who participated in the Los Angeles program.

Zhang said his company is marketing upscale residential developments to overseas Chinese who want to retire in their motherland, as well as to foreigners looking for a good buy.

During tours of City Hall and public housing projects and in meetings with groups such as the Los Angeles Assn. of Realtors, the Chinese said they got a basic understanding of the American system.

“This is the first stage,” Zheng said. “Even though it is only a one- to two-day training, every presentation I see is helpful.”

He was particularly impressed by the level of detail spelled out in real estate documents. Zheng said learning about such details is important as the government loosens control of many of the legal aspects of real estate transactions.

Although state-owned companies are playing a big role as developers under the new system, foreigners have been allowed to develop property in joint ventures and on their own, the Chinese said.

Many of the Chinese said foreigners receive extensive tax advantages and better incentives than domestic companies to participate in real estate development, because the government’s priority is to increase overall foreign investment.

But there are plenty of opportunities for Chinese companies as well, they said.

Zhang Gui Ling, general manager for a state-owned company that is involved in the resale of residential and commercial properties and arranging services for development projects, said her company earns a profit of about 40% on its deals. Such profits are not unusual for many successful Chinese companies, she added.

With this kind of success, marketing is hardly a problem for the companies, the Chinese officials said. “There’s not enough supply to meet demand,” said Xu Linfang, president of Fengxian Construction & Development Co. of Shanghai.