The Shanghai municipal government has started a full-fledged six-month investigation into the city's commercial land transactions and vowed to strictly enforce public bidding in the sector.

Land which was transacted improperly after July 2001 will be taken back and then resold through open public bidding, said an official with the municipal government after a conference between the Shanghai Supervisory Commission and the Land Administrative Bureau.

The city government is also considering public bidding for projects such as rebuilding ramshackle houses in Shanghai's old residential areas.

The investigation will last until the end of this year.

District governments, which conduct most land transactions, will, probe commercial land transactions from May to August, and the municipal government will launch its own investigation into key projects during September and October.

In July 2001, the municipal government issued a set of provisional regulations requiring all commercial land transactions to be conducted through public bidding.

The investigation this time will focus on transactions after the regulations were implemented.

The government will verify whether transactions, especially projects involving relocation of old residential houses, are in line with laws and policies.

The government will then review whether public bidding received government approval.

The government will also closely examine public-bidding procedures for commercial-land transactions.

The procedures, including announcement notices, opening of sealed tenders, tender decisions and publicizing the results, should be fair and transparent.

The municipality's investigation is also believed to be linked to the central government's recent fight against illegal "power-money deals" between real-estate developers and commercial banks, said insiders.

The current "open-bidding system" for land has its shortcomings, so the government should take urgent measures to enhance administration and ensure transparency, said Yin Shenhua, a senior researcher with Shanghai University of Finance and Economics.

Under the current system, the city government can ignore the bidder offering the highest price without assigning any reason; and some land is given away at low prices to developers.

On the other hand, most members of the tender-appraising commission are government officials who are not experts in property matters.