CHINA has been urged to crack down on illegitimate Chinese funds flooding into Hong Kong's property market. Speaking before an economic sub-group meeting, Preliminary Working Committee member, Tam Yiu-chung, said the flood of funds had led to a rise in property prices. He said luxury flats and commercial buildings were especially serious cases, and guessed the funds were coming from some major mainland enterprises which had earned their profits through foreign exchange and wanted to use the money to invest outside China. But his colleague, property tycoon Li Ka-shing, said the problem of rising prices was not serious. Mr Tam said he was told by bankers that the Chinese funds did not enter Hong Kong through legitimate channels. ''Some of these funds are even cash. They think they can make money by speculating without noticing the risk involved,'' he said. He warned that these funds were doing harm to both China and Hong Kong. ''Since these funds do not go through the Chinese official channel, they may undermine Chinese people's livelihood. ''In Hong Kong, this money fuels the problem of inflation,'' he said. The Preliminary Working Committee will soon set up a group to look at housing problems in Hong Kong. More money is rolling into public coffers because of the soaring prices. Official figures released last week showed the Government was expecting to gain $15.8 billion from stamp duty when the current financial year ends next month - $6.1 billion higher than it predicted last year. It predicted $15.7 billion would be collected in the coming financial year.
