You'd never guess looking at Luo that she makes a lot of money buying and selling residential properties.

While China tries to clamp down on lending to thwart property speculators and rein in a real estate bubble, Luo slips through the net because she doesn't borrow from banks to buy homes.

Luo declined to give her full name because she doesn't want to call attention to activities frowned on by the government.

The 30-something speculator, a small fish in the big pond of speculators, got into the market back in 2002, before the property boom, using funds pooled with friends. She runs her operation as a small private real estate investment trust, financing purchase of new properties with the proceeds from sales.

Luo and others like her in the business of "property churn" are a thorn in the side of government efforts to control a runaway real estate prices by brakes on lending. Some data suggest that mortgages accounted for less than one-third of home sales in Shanghai, indicating the size of the market outside the banking realm.

In April, the State Council, China's Cabinet, raised the minimum down payment on second home mortgages to 50 percent from 40 percent and added 10 percentage points to the interest rate for such loans.

The government also strongly recommended banks halt all lending to people seeking to buy a third home in places where real estate prices have risen too rapidly or too high. The central government didn't give any data to define what is too rapid or what is too high. But cities like Shanghai, where average new home prices soared 16 percent to 16,188 yuan (US$2,370) last year, is widely deemed to fall into the category.

New home sales more than doubled in the city last year.

Another friend of mine who works for a major state-owned bank as a credit officer told me that her team boss bought another apartment just before local implementation rules on the new state policy were unveiled.