Signs are mounting that Chinese government is determined to launch the long-awaited real estate investment trusts (REITs) in a bid to spur the country's sagging housing market.

However, it could take much longer time for the government to introduce the REITs, which provide an alternative for developers to raise money in the market, analysts said.

The State Council, or the cabinet, said in a document issued on Sunday that the government will launch REITs, which was designed to boost the domestic property market.

The document did not specify a timetable for the introduction of REITs.

Analysts said some controversial issues, such as double taxation - taxes imposed on both property assets and dividend payment of REITs - need to be solved before the formal launch of REITs.

"REITs can only be implemented when proper laws are in place, but it takes time for China's top legislature to mull out the laws," said Cao Xute, analyst with Guojin Securities.

In countries such as the US, Germany, Australia, Japan and Singapore, the dividend payment of REITs can be exempted from the enterprise income tax.

"In my opinion, REITs may come out around the mid year of 2009. The investors' passion can be spurred when the stock market is stabilized and the economy recovers steadily," said Qin Xiaomei, research chief at CB Richard Ellis' Beijing branch.

"The developers with stable rent revenue are likely to benefit from the new policy, but in the short term, it's better to consider cutting price to boost the house selling so as to raise money. This round of price adjustment may last two quarters at least," Qin said, adding that the price can't be adjusted as low as it was in the beginning of 2007.

As for the possible pilot units of the REITs it's reported that the properties in Tianjin Binhai New Area and Shanghai Pudong New Area are likely to be in the first batch and listed on the bourses in Shenzhen and Shanghai, respectively.

In mid-2008, Shanghai Pudong New Area was reported to have finished preparatory work on funds related to infrastructure properties, which targeted some office buildings and retail spaces with good performance and lease contracts.

The Tianjin Binhai New Area has also released its plan for pilot units for REITs. "Tianjin targeted the high-end industrial and commercial properties to develop REITs. Through financing in the capital market, the rent revenue and investment income can contribute to the shareholders' dividends," Zheng Jinqiao, chairman of Richlink International Capital Co, was cited by China Business News as saying.