China Vanke Co is planning to set aside at least 980 million yuan (US$136.95 million) in a special-purpose fund that will not be used in the short term to supplement its current capital and reduce financial costs, the country's largest publicly traded developer said yesterday in a statement to the Shenzhen Stock Exchange.

The Shenzhen-based firm, which raised a net 9.936 billion yuan, after deducting issue costs, from a new share sale last August, said "a total of 984 million yuan in the special purpose fund cannot be used up within a short period of time.''

Vanke raised about 10 billion yuan by selling 317.2 million yuan-denominated shares at 31.53 yuan apiece on August 24, 2007 mainly to fund 11 real-estate projects in seven Chinese cities.

"The statement probably indicates that Vanke has slowed down its pace to develop real-estate projects all across the country," said Wei Bo, a property industry analyst with Central China Securities Co. "Over the past four years, it has taken Vanke an average 18 months to finish a project - from acquiring land to getting properties ready for sale."

According to the statement, as of January 31, 7.06 billion yuan of the special-purpose fund had been used in the 11 projects, and an additional 1.9 billion yuan will be required by August 31, 2008, which means a total of 984 million yuan in the fund will not be used within a year of the fund raising.

The firm also said the proceeds to be used to supplement its current capital will be restricted to the production of its core business, and they will be due on August 27, 2008.

Property developers in China will struggle to maintain profit growth as the state bids to curb the frenzy as soaring housing prices start to bite, Standard & Poor's said yesterday.

"Liquidity could dry up if market conditions do not improve," Hong Kong-based analyst Bei Fu wrote in a report yesterday. "Many small, cash-strapped developers will not survive the harsh operating conditions."